It Was the Best of Times, It Was the Worst of Times…

By • Dec 30th, 2009 • Category: 26th Story, Big Ideas, Books, Business

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way – in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.”

- A Tale of Two Cities, Charles Dickens

Decades from now, when we look back at the book business in 2009, it seems likely that we’ll see it as a threshold year, one in which all of the signs were there for what followed. It was a year in which sales held steady (Nielsen Bookscan, which covers 75% of the market, reported that overall unit sales through December 20 were 724 million copies, only a 3% drop from last year—and adult hardcover fiction was up an amazing 3%), and a few authors were so successful (Stephanie Meyer, Jeff Kinney) that the fates of entire publishing houses were altered by them; however, it was also a year that saw publishing’s profit margins squeezed in perplexing new ways. It was a year in which some of the most highly-respected bestsellers (Audrey Niffenegger’s Her Fearful Symmetry; Andre Agassi’s Open; Edward M. Kennedy’s True Compass) were also apparently the year’s biggest money-losers for their publishers, due to their multi-million-dollar advances; at the same time, some of the books with the highest rumored advances (Dan Brown’s The Lost Symbol; Sarah Palin’s Going Rogue) were likely the most profitable. It was a year in which e-book sales increased exponentially, with the cherry on the sundae being Amazon’s announcement that they had sold more e-books on Christmas Day than p-books (though of course this was helped by all the people who got Kindles as presents and spent the day filling them); but it was also a year in which the prices charged for those e-books made them a threat to the health of the p-book retailers on whom publishers continued to rely, and possibly a future threat to publishers’ ability to make money on the e-book format itself, in spite of that format’s wonderful ability to eliminate the costs of production, distribution, and returns. It was a year in which the largest publishing houses slowed title acquisitions and reduced the number of titles they published, while one company—Author Solutions—increased its annual output to a remarkable 24,000 authors (even more remarkably, these authors were all paying for the privilege). It was a year in which review coverage of new fiction disappeared almost entirely, and yet one first novel (Kathryn Stockett’s The Help) sold more than a million hardcover copies thanks to word of mouth alone. It was a year in which publishers continued to spend exorbitant amounts of money on print advertising, in spite of data showing how ineffective such advertising tends to be, but also a year in which some publishers discovered the power of online media to reach niche markets at significantly lower costs.

What does this mean for the future? That for every trend there will be a counter trend. And since this is the time of year for Top Ten lists, here’s mine:

1. Trend: The large publishing houses will continue to reduce overhead as profits shrink in the years ahead. Counter trend: Publishers will be looking for mergers and acquisitions to compensate for those shrinking profits. The Big Six could be the Big Three within five years.

2. Trend: These companies will continue to focus more resources on fewer titles, using their strengths as large-scale marketers and distributors to publish brand-names. Title count at the largest houses could drop by as much as fifty percent over the next five years. Counter trend: At the same time, self-publishing (including partnerships like the one announced recently between Author Solutions and Harlequin) will grow exponentially.

3. Trend: Title reduction will be most significant for new talent, with the largest houses entrusting support of new authors to a handful of editorial imprints. The editors at those imprints–editors with proven ability to choose new material successfully–will increase in value. Counter trend: Editors whose job is to handle existing talent will find their roles diminished.

4. Trend: In terms of advances, the amounts paid for brand-names will continue to increase, with seven-figure or eight-figure acquisitions commonplace among authors with established track records. Counter trend: There will be an increase in five-figure acquisitions (perhaps with profit-share arrangements) for less predictable material. The six-figure advance—that dangerous neighborhood inhabited by books with lots of potential but few guarantees—will become a rare species within the decade.

5. Trend: E-book sales will grow exponentially, with the proliferation of new devices and applications for reading on smartphones, etc… Within five years, half of all reading will be done electronically. Counter trend: There will be a resurgence of appreciation for well-designed physical books, as keepsakes, gifts, etc… While e-books will create a downward pressure on pricing, there will be notable exceptions (as seen this year with Carl Jung’s The Red Book, in great demand at $195.00, or Thomas Keller’s gorgeous Ad Hoc at Home, a bestseller at $50.00).

6. Trend: As more consumers become e-book readers, demand will increase for the availability of e-books simultaneously with p-books. Counter trend: Publishers will try a variety of strategies to meet this demand while not undercutting their p-book sales, such as offering more expensive “enhanced” e-books at publication and plain vanilla, less expensive e-books several months later (the strategy recently announced by Macmillan) or by offering a variety of “bundled” discounts to purchasers of multiple formats (prediction: within five years, it will be common practice to give every p-book purchaser a “free” e-book version of that book at time of purchase, as is already the case in the music business, in which someone who buys a cd can also listen to that cd on other devices in digital form, without paying a separate fee).

7. Trend: Fewer and fewer books will be sold to publishers at “auction,” and that practice will disappear completely within five years, as more and more publishers realize that the “winner” in such auctions—the publisher willing to pay more to acquire a book than any of their competitors–is often actually the loser in the end. Sales will be made either by brand-name authors to their previous publishing company or by new authors to carefully chosen editors with strong reputations. Counter trend: Instead of auctions for the highest advance, there will be auctions in which a basic advance is established by the agent, with the auction winner being the publisher who bids the most in marketing committed to the book.

8. Trend: As the initial sale becomes less of the focus for authors, the agent of the future will become more of a business manager who handles every aspect of an author’s career, overseeing the author’s online presence, developing sources of revenue outside of book sales such as workshops and lecture tours, and acting as the author’s publicist in between publications. Counter trend: Publishers will create free-standing departments whose services can be purchased a la carte by authors, whether that author is self-published or published by a competitor who doesn’t offer such services.

9. Trend: As the Boomers lose their eyesight and their children become teenagers, demographics will favor books for young adults over books for adults. This is also the generation most likely to embrace a variety of online and offline formats, without feeling the need to choose one over another. Counter trend: While auctions and advances diminish for adult titles, they could heat up for young adult material as publishers bet big in search of the next Stephenie Meyer. (Prediction: publishing houses will soon have entire departments devoted to developing books about the undead.)

10. Trend: Every year for the foreseeable future, books will be purchased between Thanksgiving and Christmas about how to prepare high-calorie foods (a favorite from this year: Fat: An Appreciation of a Misunderstood Ingredient, by Jennifer McLagan). Counter trend: Every January for the foreseeable future, the bestseller lists will be dominated by books about how to lose the weight gained by eating those high-calorie foods. (Not much of a prediction, sorry…but I needed a tenth trend to complete the list!)

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  • http://twitter.com/MJRose MJRose

    Bob – I'm not in the slightest bit surprised that I agree with all of that and have been talking about 8 al a lot! And right on about print ads! (Authorbuzz.com increased sales of some books as much as 20% by going online and doing marketing smart).

    Things are not going to look the same for long but we are in a creative biz and we need to approach the future with excitement not fear.

    Happy New Year.

  • http://joeflood.com/ Joe Flood

    What, no mention of the Apple Tablet? If it's true, it could have a huge impact on e-books by making them mainstream.

    Really liked the list, especially #8. I'd love to have an agent like that.

  • http://www.loudpoet.com Guy LeCharles Gonzalez

    Great post, Bob. Briefly, the act of publishing will survive, while publishers will need to get smarter in order to do it profitably. Makes sense to me! #7 is particularly intriguing.

    Bonus points for not referencing the mythical iUnicorn!

  • kwn2196

    I think you were smart to predict “digital reading” without getting device-specific. eReaders are just getting started and I think the multi-use devices will be popular but not replace dedicated devices, at least not without some real leaps in technology.

  • 1eleanorandrews

    Bob,

    Trend 1 . . . agree.
    Trend 2 . . . agree.
    Trend 3 . . . agree.
    Trend 4 . . . don't agree.
    Trend 5 . . . strongly disagree — from GALLEYCAT: “Bloggers Question Amazon Sales”
    By Jason Boog on Dec 29, 2009 04:23 PM
    Trend 6 . . . don't agree.
    Trend 7 . . . agree.
    Trend 8 . . . agree with trend but strongly disagree with counter trend.
    Trend 9 . . . wrong. Most ebook readers are middle aged with bad eyesight! While I agree the growing target audience of choice is young adults and the many publishers will look for the next Twilight series, I strongly disagree with the devoted undead departments. As with all book buying trends, the undead craze will die out only to return another day.

    The young adult audience is fickle and titles must compete with electronics, gaming, and music for that group's disposable dollars.

    Trend 10 . . . incomplete. You left out the undead and zombies for October 31.

    Eleanor Andrews

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  • http://idealog.com/blog Mike Shatzkin

    Bob, this is a very perceptive post. I like your new auction idea and it triggered a related thought for me. If the agent sets the number for the advance and the houses compete for the best deal that meets that number, might not things like royalties and rights splits enter into the negotiation as well as marketing dollars?

    I also like your perspective on the agents' business model. I don't think there are very many working agents today who aren't thinking about that question.

    The one big thing I think you leave out is the trend to verticalization. Big houses will be really rearranging their lists for marketing logic (not just “new writers” versus “established writers”), exiting genres or categories because other houses, large or small, have established a web-based marketing foothold that can't be matched. Any house not working on creating those edges for themselves in the future will be yielding the market, niche by niche, to everybody else.

    Happy New Year.

  • http://katebarsotti.com/ Kate

    Thanks for writing this analysis – I am weary of articles on the “death” of publishing or books. Your perspective shows change, which might cause anxiety, but it's normal and opens new opportunities. E-books might be the best thing that's happened to literature in a long time, and those of us who write/illustrate for children and teens are pretty jazzed.

  • http://www.theharperstudio.com/ Bob Miller

    great to see the feedback, thanks…and thanks for your verticalization point, Mike…that would have been a much better #10 than diet books!

  • http://www.huffingtonpost.com/books/ Amy Hertz

    Love this Bob. Disagree with #10–diet books will disappear unless they're a major celebrity. People will turn to the web for the information.

  • mrjeffrivera

    Great thoughts, Bob. I'll be sure to include some of these in your forthcoming GalleyCat article.

  • http://robertwahl.blogspot.com/ robert wahl

    TREND… Sarah Palin's book continues to hemorrhoid the eye!

    Haste yee back ;-)

  • http://pokerbusinessman.blogspot.com/ Poker Businessman

    I predict future kindle clones will cost less than $29.99 at Wal-Mart. Information is going to be dirt cheap in the coming years. We have definitely entered the “conceptual age” as Daniel Pink calls it in A Whole New Mind. The best strategists and manipulators of information will win.

  • azikate

    I think you've got a lot of sense. : Another trend is not wanting to read large blocks of text. That first paragraph? I had to force myself to read it. So here's my #10 Trend: Reading will shift in line with the 140 character tweets to transition to short, punchy paragraphs. Anything longer that four or five lines should be a new paragraph. For everything.

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  • Laurence Kirshbaum

    Bob — As usual, you clarify the trends and counter-trends which is (brilliant cop-out) to say that it's impossible to come up with definitive trends. In a business where hundreds of thousands of new titles come out every year, how can you quantify or qualify what will happen? Nonetheless, I agree with much of what you say. I don't agree that Boomers are losing their eye-sight, at least not so fast. Nor are we about to be dead and then un-dead. I wonder how Obama-care will treat zombies? If insurance companies can't cancel coverage, does that include those who were dead and returned? But I digress. The missing 10th or 11th trend above is that the consumer and author will become much more directly connected in the next decade thanks to the internet environment. And it isn't just the YA or college audience, I heard more cocktail discussion about the Kindle and Nook over the holiday than I did about where to get the Early-Bird specials near the retirement communities in Florida. In the end, the consumer of all ages is really getting comfortable with digital reception in smart phones or smart readers or, coming shortly, expansive tablets from Apple and Microsoft. Bookstores will become digital centers, ditto for libraries, and yet — counter-trend, two can play this game — many physical books will benefit from the ability to publicize and socialize or twitterize the books that aren't brand names (as you do so brilliantly). Content is still king, but its digital warriors will be powerful avatars.

  • http://thelafargeagency.com/ albert

    cool post

  • http://www.debbiestier.com Debbie Stier

    I agree Mike — and I loved seeing the story in PW today that F & W is having such success with that strategy.

  • http://www.debbiestier.com Debbie Stier

    “Content is still king, but its digital warriors will be powerful avatars.” — Or, as Gary Vaynerchuk says, Content is King, but Marketing is the Queen and the Queen rules the house.

  • http://www.debbiestier.com Debbie Stier

    Agreed. I just discovered http://www.dailyburn.com and I'm obsessed!

  • 1eleanorandrews

    Laurence Kirshbaum,

    Authors and audience already interact through social sites like Facebook and Twitter. And it is correct that a diverse demographic utilizes electronic readers.

    However, one vital trend seems missed. eBooks haven't been a profit generator as demonstrated by an article in the Huffington Post “eBooks Outsell Print Books And Free eBooks Are Biggest Bestsellers by Jessie Kunhardt and in the GalleyCat's “64 of the 100 Top Kindle Store Bestsellers Are Free” By Jason Boog on Dec 28, 2009.

    Amazon seems to profit from the Kindle but not from the eBook. So the trend of “free” content is a powerful foe to the “pay for” published content in any format.

    Eleanor Andrews . . .
    on Facebook and Twitter

  • Patrick Janson-Smith

    This is a fascinating and thought-provoking analysis, Bob, I congratulate you. A Happy New Year to you and to all of us who're still in the book publishing business and have every intention of sticking around, awake to an ever-more-rapidly changing world. The possibilities are endless, the challenges are daunting, but let's take heart from the late great Charles Dickens and those wonderful opening lines from A Tale of Two Cities, written in 1859. It puts me in mind of a remark I once made to my mother-in-law in re bringing children into the world: “I don't want to have children, the world's too ugly a place.” “That's exactly what our generation thought,” she replied. (Four children later…) When I think of all the changes wrought since I entered publishing in the late 1960s (from the manual typewriter to the electric typewriter to the computer to the desktop; from the telephone to the telex, to the fax to the cellphone; from the mad panic over the introduction of CD-Roms to the advent of the E-book, and all manner of developments in between, the future does not frighten me: books will still furnish many rooms. It's only if they are burned that we should start to worry about the loss of civilization. Onwards.

  • http://twitter.com/mewshep Debbie Williams

    Liked the article…

    Trend – publishing houses will move out of London to try and bring down overheads
    Trend – there'll be a VERY cheap and basic e-reader (£50ish?) which will become a huge seller
    Trend – there'll also be a very snazzy, interactive e-reader at the top end which will enable bookd to have add-ons, enabling authors to become even more branded then they are already

  • http://kayshostak.blogspot.com/ Kay Shostak

    Good post and one I'll be sharing on twitter. On #8, I've recently been signed by a new agency and the model you propose is how they are set up. I loved the concept while talking to them and like it even more seeing it on your list!

  • http://www.catchn.net/ Kate

    I think you're absolutely right about the changes in payment structures and acquisitions to come – the current model is rapidly becoming untenable, and I have a feeling profit-sharing (or at least lower advances and higher royalties) is going to be the way of the future.

    Bundling looks to be big, too – I see 2010 as the year when mass-market publishing begins a sea change towards selling content, not platform, and starts to do what a lot of textbook publishers already do – include electronic access to the content along with the paper version, perhaps for a slightly higher price. Along with this, I have a feeling we're going to see a shakeout over standards – Kindle? ePub? PDF? – and readers demanding to be able to access content they've paid for on any platform they own (paper, Kindle, iPhone, BlackBerry, laptop).

    Should be an interesting year…

    All that said, I think Prediction #4 is going to be hard on authors. Mostly because I think you're right – it's going to come down to superstars publishing, and a lot of hard times for lesser-known authors, and really rough going for new authors. There's a chance, though, that small presses can step in where the big houses might be unwilling to take a risk – or that new platforms like Catchn.net might be able to step up as launching pads for new voices, proving that there's an audience for a particular writer before a big publishing house takes the risk of acquiring them.

  • Bob Miller

    Thanks for chiming in, Patrick!!! and Happy New Year to you, too…

    Here's to persisting (making books, raising children) in spite of all advice to the contrary…

  • cherylktardif

    I found your predictions for a new era in publishing to be very interesting–and I believe you've hit the nail on most of them. Thanks for sharing your insights, Bob. It's going to be very interesting to see how things progress in the book industry.

    As a published author, I always try to embrace new technology and directions. At some point, it becomes “sink or swim”, and I've learned that the only way to get ahead in this biz is to paddle hard!

    Cheryl Kaye Tardif, suspense author

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  • BruceBatchelor

    Bob, loved your list! I could really relate to that last trend, but can report that I do feel much better and lighter now. :-)
    If I was to suggest a few more trends, they would be:
    11. the decline of independent, new-book stores, following the pattern of collapse of music stores and video rental stores. The counter trend will be the reinvention of some of those stores by adding other higher-margin products, such as used books, gifts, etc., and more “entertainment” such as dramatic readings and musical performances, accompanied by food and alcohol. The former bookstore becomes an evening destination for cultural creatives.

    12. Trend: end of returnable book terms as publishers finally figure out that their bottom lines are suffering needlessly. Counter trend: publishers increasingly selling directly to the public, cutting out the retailer altogether (saving 40% or more). And also cutting out the distributor (and its 10% to 20% margin).

    13. Trend: most p-books will be bought online as local bookbuying opportunities dry up with closures. Counter trend: the larger publishers will set up drop-shipping capabilities to allow any website to sell their products. These e-retailers will earn only about 10 to 15%, relaying the order to the publisher who will ship the product directly to the consumer under the retailer's label. (Note that again the distributor has been cut out of the process altogether.)

    14. Trend. Consumers will be thinking about “who tells the best stories” (and spreading the word virally) and “how do I enjoy them best.” This means the big publishers lose their advantages of big wallets to finance ad campaigns and pay for massive print runs sold on consignment; and everyone will scramble to offer their p-books in a dozen formats of eBooks, audio books, video books, etc., etc. to satisfy an increasingly fragmented marketplace. Counter trend: This suggests opportunities for re-thinking the business we are all in, and stop being fixated with p-books. We may see the next big innovation in storytelling during this coming decade.

    Best wishes for 2010.
    thanks, cheers,
    Bruce Batchelor, publisher at Agio Publishing House

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  • http://www.medyumburak.com medyumlar

    Bob — As usual, you clarify the trends and counter-trends which is (brilliant cop-out) to say that it's impossible to come up with definitive trends. In a business where hundreds of thousands of new titles come out every year, how can you quantify or qualify what will happen? Nonetheless, I agree with much of what you say. I don't agree that Boomers are losing their eye-sight, at least not so fast. Nor are we about to be dead and then un-dead. I wonder how Obama-care will treat zombies? If insurance companies can't cancel coverage, does that include those who were dead and returned? But I digress. The missing 10th or 11th trend above is that the consumer and author will become much more directly connected in the next decade thanks to the internet environment. And it isn't just the YA or college audience, I heard more cocktail discussion about the Kindle and Nook over the holiday than I did about where to get the Early-Bird specials near the retirement communities in Florida. In the end, the consumer of all ages is really getting comfortable with digital reception in smart phones or smart readers or, coming shortly, expansive tablets from Apple and Microsoft. Bookstores will become digital centers, ditto for libraries, and yet — counter-trend, two can play this game — many physical books will benefit from the ability to publicize and socialize or twitterize the books that aren't brand names (as you do so brilliantly). Content is still king, but its digital warriors will be powerful avatars.

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  • http://www.stephenbrayton.com Stephen Brayton

    Very insightful. But don't forget about the trend of the growing success of smaller presses.

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    Thanks for chiming in, Patrick!!! and Happy New Year to you, too…

    Here's to persisting (making books, raising children) in spite of all advice to the contrary

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  • thomas sabo

    ed the list, especially #8. I'd love to have an agent like that.

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