Publishers: no better than fund managers?
Posted by Paul Samael on Thursday, November 1, 2012 Under: Random thoughts
In my last post, I expressed surprise that commercial publishers weren’t interested in a novel which ticked all my usual boxes (thought-provoking and ambitious yet not at the expense of readability or a good story) but was also by an established author and should have been relatively easy to market effectively. Yet despite all that, it was rejected because it wasn’t felt to be “commercial” enough (which, translated, probably means not enough of a “safe bet”).
But perhaps I am being unfair to publishers. After all, they have a business to run – and if they’re going to invest in an author, they need to be satisfied that he/she will repay that investment. Since they are almost certainly overwhelmed with potential candidates for publication, who can blame them for choosing only the books they think are a safe bet ?
I could accept that justification if I thought that publishers were actually any good at picking winners. But the evidence would seem to suggest otherwise; they publish an awful lot of books, the vast majority of which sell very poorly indeed (see this post - in particular the link under the bullet headed "Bad news"). So the awful reality is that for publishers, books are more like premium bonds – they have very little idea which ones will be successful and are just keeping their fingers crossed that enough of them will do well to make the whole endeavour worthwhile (and profitable).
Their approach reminds me of fund managers, who will glibly tell you that they use their great insight and expertise to generate a fantastic return on your investment, but very few are consistently able to outperform the stock market over the longer term. And as fund managers are obliged to point out, past performance is no guide to future performance (which sounds counter-intuitive, but it’s statistically proven in most cases). So generally speaking, your money is better off in an unglamorous tracker fund which has lower costs (it requires far fewer expensive fund managers) and just follows the market (which normally outperforms individual fund managers in the long run).
What might the publishing equivalent of a tracker fund look like? Well, it would probably have to be based around ebooks, because these are extremely cheap to distribute (so you avoid all the costs of hard copy). But it wouldn’t do away with the “skill” of the publisher altogether. For example, even in a tracker fund, skill is required to determine what basket of investments it should contain. In a similar way, any publisher using this approach would want to ensure that it had covered all the bases i.e. it had a diverse portfolio of books giving it a chance of success across a broad range of categories.
Further publisher intervention would be required to ensure that books met certain minimum standards – after all, just as you wouldn’t buy a tracker fund from a dodgy-looking guy on a street corner, so readers are more likely to buy books from a publisher they perceive as having imposed a minimum quality threshold. However, there would need to be a major shift in emphasis away from attempting to pick winners based primarily on what’s been successful in the past; instead, the focus would need to be on a more diverse, adventurous selection (on the grounds that a diverse portfolio including a significant proportion of books which are not “safe bets” in the conventional sense stands a better chance of containing at least some books which will meet the criteria for future success).
I am not saying that all publishing should go down this route. If I were a shareholder in a publisher, I would still want it to invest in tried and tested categories like cookery books or celebrity memoirs because these provide a safe return on my investment (even though personally, I find that trend slightly depressing). But given the low costs of ebooks, I would also expect the publisher to be taking a more diversified and adventurous approach in that area – because even if only a few of those titles prove to be a big success, the return on my investment is likely to be considerable (and as a shareholder, I would want to be in with a decent chance of benefiting from that).
I admit that some costs would be incurred in the selection process – but if you consider the number of people who are prepared to review books free of charge (me included), there would probably be scope for a low cost (or even a no cost) model in that area too. Of course, such an approach would be bad news for commissioning editors – but their efforts would be better directed towards ensuring minimum quality standards and maintaining a more balanced and diversified portfolio.
Nor would it be terribly difficult or expensive to keep an eye on which ebooks in the portfolio were starting to do well or getting good reviews. The publisher could then take a view as to which of these titles should be promoted more heavily with a view to bringing them to a wider audience. This would ensure that the marketing budget was targeted towards books with proven appeal, rather than ones that publishers think will succeed based on misplaced confidence in their own ability to pick winners.
But recently announced merger of Penguin and Random House suggests that big publishers have no intention of innovating along these lines; they seem to think that just getting bigger will solve all their problems. If I were a shareholder in these companies, I would be furious with them; the fate of the music industry gave them advance warning of what might be coming down the track with ebooks, but did they do anything about it? No, they let others – like Amazon – make the running. And now all they seem able to do is whinge about how powerful Amazon is becoming.
There is probably still time for publishers to save themselves. Their efforts to date don’t give me much hope that they will take actually do anything about it – but as noted above, past performance isn’t always a good guide to the future, so they may yet surprise us all.
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In : Random thoughts
Tags: publishers ebooks penguin "random house" amazon
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