Introduction: Can Collapse Be Averted? (single page)

(From “Surviving a Digital Disruption: Smart e-Book Publishing, Small Houses” by Victoria Sandbrook, Emerson College, December 2009)

The stability of the American economy has a reputation for disintegrating in a fiery ball of hubris. In the 1800s the U.S. faced a crippling series of five financial panics, crashes, and depressions caused by an overdependence on credit and reckless speculation. The Great Depression—preceded by the Roaring Twenties and caused by reckless trading—not only devastated the quality of living and peace of mind for people in the U.S., but also sucked the rest of the world into an economic crisis. Warning signs of each crash could have been identified, but were either overlooked or downplayed by the media. In hindsight, the results seemed most catastrophic when panic met a lack of foresight.

I contend that the publishing industry may face similar consequences should fear and unpreparedness continue to rule decision making across the industry, but the business of book publishing should not consider itself dead in the water yet: the technology currently available for improving efficiency in production through digital workflows will not only keep the print business alive but will allow publishers to move into digital publishing as quickly as the market demands. Once in place, a strong digital workflow will allow for better editorial control of content, more effective marketing, and improved sales channels, all leading to stable profit despite the current economic downturn. The changes that must be made to the traditional publishing model will come easiest to small publishing houses with low overhead costs and ready support for experimentation, making the contest to become future leaders of publishing—in print and digital forms—anyone’s game. Traditional scholarly sources, a collection of astute blogs, and interviews with four optimistic publishing professionals support my conclusion that thoughtful modernization of business models will have more lasting, valuable effects than any hastily acquired list of blockbusters or even a respected backlist of classics.

The basis for hope for any solution depends on both identifying the roots recent collapses of other modern industries and differentiating the industry’s problems and strengths from all other trades in decline. Michael Nielsen, a scholar researching the “shift…in how scientific discoveries are made, a shift driven by online tools of collaboration and sharing of scientific information,” believes that minicomputers, music, newspapers and other industries faced “disruption” when they reached the point of their catastrophic decline, not the social and financial effects of foolish or malevolent leadership. When technology surpassed that of the established powerhouse, new companies with “a radically different organizational architecture, using an entirely different combination of skills and relationships” began creating more useful products—microcomputers, mp3s, and blogs, in the case of these three industries (Nielsen). To compete, the existing companies would need to “make drastic, painful changes” with financial investments at a level that would “actually place incumbents at a disadvantage, locking them in” (Nielsen).

On top of this digital disruption, American publishing is dealing with several issues at once. The current 2008-2009 recession occurred as the housing bubble popped and the subprime mortgage market collapsed and as the publishing industry began to come to terms with its own impending digital disruption. As the industry stepped into the national spotlight—the following act to a decade of panic in the music industry and the Hail-Marys of periodical publishing—banks were tightening their belts and cutting access to ready cash, retail sales were slumping to depressive lows, and all signs pointed to the end of reading as consumers turned to their electronics. Under the magnifying glass of American news media, publishers are under pressure to change or fold quickly and to find better solutions for survival than the failed industries that have gone before them.

In the case of publishing, e-books and digital texts are the disruptor engaging the traditional business model—print books sold through book-and-mortar stores—in a battle for market share. Unlike the music industry which faced very immediate competition from iTunes and illegal peer-to-peer sites like Napster, publishing has no greater enemy than itself. Instead of racing to adopt a competitor’s business model, publishers must adapt to market demands for digital content in order to keep profit margins high enough to stay solvent. Should publishers remain passive as the digital disturbance grows in power, vendors, distributers, and programmers will maintain the upper hand by setting prices, establishing standards, and instituting policies without involvement of or regards to the business of publishing. Actively pursuing the development of the digital publishing market, however, will assure that publishers’ interests are at the forefront of progress.

Isolating one fix that will suit every publisher would be nearly impossible. Though publishers all rely on a similar generic business model, the vast differences between companies’ products, audiences, operating costs, and leadership may mean that even the pairing of a large-scale disruption and long-term recession would leave a few hearty and prepared publishers in the ranks to keep the heart of the American written word alive and well. A Tools of Change for Publishing 2009 conference roundtable moderated by Joe Wikert turned to CEOs Eileen Gittins of Blurb.com, Clint Greenleaf of the Greenleaf Book Group, Michael Hyatt of Thomas Nelson, Bob Young of Lulu.com, and Tim O’Reilly of O’Reilly to see how each is handling—and anticipating—the realization that drastic changes to business plans will be necessary. During the roundtable, Clint Greenleaf brashly states “At the risk of sounding masochistic, I love recessions….I think these are great times. You clear out a lot of dead wood; there’s a lot of competition” (Wikert et al.) And many people agree with him: those publishers who are able to change quickly and efficiently will survive the recession and disruption to usher in a new era. For the small, independent publisher this is actually good news. With smaller overhead, far fewer titles in warehouses, and closer-knit companies run by employees willing to risk becoming a dark horse among the mega-incumbents, small publishers can afford to make the changes that would be “drastic [and] painful” to the established Big Six of publishing.

But the saving graces of the publishing industry could likely be the death of it without care. If publishers move too quickly—driven by panic, without seeking out the right information—they risk winding up in the same place as those that cannot or will not change with the times. Commitment to one distribution pathway, one format, one plan for change could mean the end of everything. As nothing is assured in the publishing industry—not timing, not finances, not market share, not even audience—the only commitment a small publisher should have is to making the best decision every time. An honest estimation of the state of the industry and clear-headed plans of action must guide publishers of all sizes to make healthy decisions about the future of their business models: the sentimentality and pride of American publishing must be shed to save the future of the American written word.

Unfortunately, in the tradition of American publisher stoicism and competition, the data necessary for making decisions outside of the vacuum of one’s own house or imprint is nearly impossible to gather. With the exception of BookScan, the Association of American Publishers, and the Book Industry Study Group, few reliable sets of statistics about sales and profits are available, and any that are can be extremely cost prohibitive to individual researchers, scholars, and small publishers dependent on every penny of their cash flow. Case studies are few and far between and cannot often be easily compared across houses or markets. Unlike industries that require a measure of transparency (usually thanks to government involvement, from which publishing is partially protected by the First Amendment) and compete strictly through quality and individuality of product, publishers guard their profit margins despite the detriment to the business at large. Without open data from the industry, small publishers forging ahead on a path of change and resilience must rely on the skills they’ve learned in years in the business to make informed decisions. But what happens when those decisions are being made about products that defy all previous expectation and imagination?

Rather than moving ahead blindly, publishers can use a quickly growing resource to gather information about business models, about what has and hasn’t worked in the industry: the Internet. Web 2.0 tools have laid the groundwork for an extensive system of communication for the publishing industry. Conference talks are published in 140-character snippets on Twitter. Agents, editors, authors, and industry veterans blog about what companies—theirs’ and others’—are doing in the industry. Even industry e-newsletters work to keep everyone in touch, sending everything from shocking news to daily aggregations of book deals. Combined with what limited scholarship is available in journals and books, these organic reports offer a big picture of the industry’s best and worst practices in digital publishing that becomes clearer with every hour. The reinvention of community in the publishing world may be the key for small publishers who are banking on their size and willingness to take risks; with decentralization rapidly spreading and information rapidly surfacing—even through channels not always regarded as reliable—small publishers stand to gain the most from an increasingly networked publishing community.

In order to make some sense of the internet chatter and scarce data available, “Surviving a Digital Disruption: Smart e-Book Publishing, Small Houses” surveys the industry today, focusing on digital publishing and its place in the business models of small trade publishers. Where industry statistics are buried by cost and opaque tradition, voices from across the industry’s growing online network opine on the practical issues publishers will face when building a digital publishing plan. After first determining the emotional readiness of the industry to forge ahead into investing in new technologies, an investigation of a publisher’s responsibility to content creation and a review of new avenues of power for digital publishers highlights the theories, possibilities, and limitations currently available. To better emphasize the differences and similarities in the tone of industry conversation, four profiles of members of the publishing industry, in very different roles, seek to locate the balance between pragmatism and artistry and between realism and hope. The result: a justification for investing time and money in digital production, distribution, and marketing that relies on opinions and experiences of real publishers rather than pundits and business experts alone. Though the facts may change quickly and unpredictably, this may be a good foundation that will encourage responsible publishers to explore their communities and every option available as the digital revolution comes of age.