Turning the Page
Our fragile publishing industry is struggling to adjust to a new world in which the printed word may be an afterthought
There may or may not be an economic crisis in this country—a year later, and already we’re being told that we’re recovering from the recession many journalists told us would rival the Great Depression (a quick survey of the literature of the ’30s shows how much better off even the worst off among us are now). What is certain is that there has been a tectonic shift in a few core industries, notably the auto sector, mass media—and now, cataclysmically, book publishing. The effect of the digital revolution on the book trade has been every bit as shocking as diminished consumption and a new environmental awareness have been on the car business. The difference is that book publishers, historically aware of their precariousness, are—as Google Canada spokesperson Tamara Micner would have them do—“skating not to where the puck is but to where it’s going to be.” Unlike their brethren in Windsor, Oakville, and Oshawa (the colour of a collar means nothing now), they are not stubbornly insisting on their right to make a product that fewer and fewer people are likely to buy—in the case of publishers, books printed on paper.
By and large, book publishing has always relied largely on a blockbuster model in which, at least in theory, a small number of winners pave the way for the extensive, middling rest—books that may have all sorts of superior qualities and be proof of their authors’ dazzling futures, but that do not, for the moment, pay. All the decisions that especially large publishers make, from the size of advances to authors to the size of print runs, are founded on the dogged belief that a book will be propelled to the top of the bestseller lists—a tenuous possibility at the best of times.
In most cases, and certainly when an unanticipated bestseller does so, it is by virtue of a host of circumstances that has little to do with rational prediction and almost everything to do with chance. To a degree, public predilections can be explained—if the novels on the racks of pharmacies and airport stores look eerily similar, it is because they are. All writers, like the proverbial aboriginal oral storyteller, essentially adapt the same stock stories for new audiences to hear. “Books are like toilet paper,” the fabled Toronto salesman of remaindered books, Bob Dingman, is reputed to have said. “You run out, you go buy some more.” Certainly publishers believe this, whatever their pronouncements to the contrary. They know that each year their lists must have the same sorts of books on them: the thriller, the multi-generational saga, the immigrant novel, the political memoir, and so on. They know the same fodder is what usually sells.
To some extent, then, though only to a point, the public can be manipulated. Those who are struck by an occasional tendency to want to buy a book—in summer, for themselves, or at Christmastime for someone else—are most likely to return to the comfort of an author they already know, whether James Patterson or Margaret Atwood. And in the weeks before Christmas, when approximately 40 percent of books are sold, publishers who can afford to—notably, the Canadian arms of the international houses such as HarperCollins, Penguin, and the Bertelsmann Group (including Random House, Doubleday, and Knopf Canada)—furnish the bookstores with an oversupply of such books, hoping to bully their titles into prominence and bestsellerdom. Hence all those ungainly pallets you will encounter again this December crowding the aisles of big box stores.
This highly effective act of public persuasion is not an option for small, independent publishers, whose expendable resources are blood, sweat, and tears. For them, grit is the only sensible way forward. But grit is not a growth model, and so even the independent publisher—no matter how small, no matter how previously wide of the mark—still fantasizes about the Big One, about a Giller or a GG win or an endorsement by Oprah. And why not? It happened to Eckhart Tolle, and before that to Rohinton Mistry and Ann-Marie MacDonald. Even the unlikely Hal Niedzviecki, an enthusiast of web culture whose track record has been otherwise unremarkable, found himself on Oprah’s summer reading list this year.
Or, if not Oprah, then word of mouth. Every once in a while, uninstigated buzz—what people recommend to each other unprompted—can sling into the retail stratosphere an unheralded book like Sara Gruen’s Water for Elephants; Joseph Boyden’s second and not-quite-as-good-as-the-first novel, Through Black Spruce; or Lawrence Hill’s The Book of Negroes, the third novel by a hard-working, immensely talented but previously only mid-list author.
Today, however, the Big One is not just the stuff of dreams, but a matter of necessity. Now the Big One has to happen. Whereas the conventional wisdom used to assert that 20 percent of books paid for the remaining 80, the combined effect of the Internet, digital mechanisms of delivery, and big box stores has been to raise the stakes so that 10 percent of book sales now pay for the remaining 90. Says Susan Renouf, associate publisher at McClelland & Stewart and a veteran of the Canadian book trade, “When a book doesn’t take really quickly, it is not allowed to stay in stores long enough for word of mouth to build. A book needs that first big weekend or an award, or else the book is stuck.”
There are exceptions, of course, which is why the more writer-friendly publisher’s adage says, “Books have a long life.” Ann-Marie MacDonald’s Fall on Your Knees had been in the marketplace for almost six years before Oprah noticed it. Lawrence Hill had been working the literary festival circuit for months, like any other author fighting despair—more empty seats, more copies unsold—before The Book of Negroes went ballistic. And Rawi Hage was putting the finishing touches to Cockroach, the second novel of a critically acclaimed but fairly impecunious career, when he won the IMPAC Dublin Literary Award, the most lucrative in the English-speaking world for a single work of fiction.
Word of mouth has always existed, but the web has dramatically augmented its effect. Now everything has changed; everything is up in the air—or, to be more exact, the web’s ether. To date, publishers have had a relatively easy ride. During the past seventy-five years, the music business has had to adjust from seventy-eights to thirty-three-and-a-third rpm “long-playing” records, then forty-fives, reel-to-reel tapes, eight-tracks, cassette recorders, CDs, and now MP3s; the film industry has moved from main street cinemas to video stores, pay TV, DVDs, and now Blu-Ray and web downloads. Meanwhile, the book trade has made the unremarkable transition from hard to soft covers.
But the book industry’s digital future, one that was comfortably far off even as the music industry was being decimated, is now ineluctably and forcefully here. No longer the stuff of speculation. Today, Canadian publishers are having to question, at the most fundamental level, what it is that they do—what books are, how they market and sell them, and whether making physical books is any longer the business they are in.
The Long Tail was the proposition, formulated by the American author Chris Anderson, that the Internet would facilitate the purchase of previously unsold items by exploiting the nearly infinite “shelf space” of the virtual store. Publishers adored this scenario because it promised new life for backlisted books that big box stores, pharmacies, and airport stores were, in the face of ever more daunting inventory, more and more reluctant to offer. The Long Tail was especially appealing to small publishers without the means to overproduce books, or to buy “co-op” advertising; all those “Buzz” or “New & Hot” tables that occupy space that is, in fact, bought and paid for.
The Long Tail was supposed to have created a new retail context in which the full, eclectic range of consumer tastes would be realized and, for producers—in Susan Renouf’s words—“being small, independent and nimble would be an advantage again.” Except that didn’t happen—at least, not in the way the web gurus anticipated.
What the Internet has not done in the way Anderson predicted is to attract masses of customers turning to their computers wanting to track down an early edition of Giller Prize winner Austin Clarke’s When He Was Free and Young and He Used to Wear Silks, buried deep in the company’s backlist, or Cormorant’s debut collection of stories by Joseph Boyden, Born with a Tooth. Or at least not in numbers sufficiently large to matter. Rather than connecting the public to the glorious cornucopia of the Long Tail, the effect of the web has been to serve fewer blockbusters better.
Last year, Anita Elberse, an associate professor of business administration at Harvard University (and previously one of Anderson’s collaborators), used data from American DVD and music retail sectors to argue that the Internet has augmented the chunk of the pie eaten up by just a few bestselling items. According to Elberse, the truth about bestselling books, movies, DVDs—or, for that matter, Sarah Palin’s rimless glasses or Michelle Obama’s J. Crew inauguration gloves—is that customers who may make only one or two purchases a year are the ones who create bestsellers. Inveterate readers, filmgoers, and lovers of music may buy fifty times as many items over the course of a year, but they represent only a tiny minority of purchasers.
The great majority of customers who venture online to shop just occasionally—the ones all publishers want—are not flocking to some obscure item hidden in the intricacies of the Long Tail, but to buy an item that is already up front and bestselling. They are doing so because the book, the CD, or the movie is, in fact, the secondary purchase. What these visitors are actually doing is buying a ticket to a conversation—and they want to be a part of it during that first weekend, month, or year, while it is current and dominating headlines and dinner table talk. “A book is more than words on a page,” says Joel Silver, the head buyer at Indigo Books & Music. “It takes eight to ten hours to read and it changes a person, but it also has a social application. It’s about how you wear it and how you pass it on. People want to show up at a cocktail party and say, ‘Hey, have you read that? What do you think of it? ’”
So the actual effect of the Internet on retail has been to propel fewer bestselling items into the fat front end of the action while reducing the sales of the innumerable products that make up the dwindling remainder. Think, for instance, of Stephenie Meyer’s Twilight series, of Malcolm Gladwell’s Outliers, of the continued dominance of Joseph Boyden’s Through Black Spruce (more than fifty weeks on the bestseller lists), or of Lawrence Hill’s The Book of Negroes, a novel that has been selling in the range of 2,500 copies a week . Today, just a small number of books compete for consumers’ fleeting attention. The tail is longer, but it is also thinner. Backlist sales that for some publishers once provided 70 percent of sales now account for 30. Now, more than ever, a book needs to be part of the conversation if it is to sell.
At its core, the battle for readers is a zero-sum game. If the number of reading hours per person per year is constant, then Elberse’s qualification of Anderson’s Long Tail is bad news for small publishers and the majority of authors. But in the current recessionary climate, and in the US, especially, even large publishers are beginning to find that “pushing” hundreds of thousands of physical books at consumers who are increasingly accustomed to “pulling” what they want off the Internet is prohibitively expensive. HarperCollins announced that its US sales were down about 20 percent last year; to the extent that overprinting is part of a publisher’s economic model, a drop in real sales of that magnitude makes that strategy much more costly. The number of returned books—those that do not sell and are sent back to the publisher by the bookstores—must be factored into the cost of the units that do, as must the expense of physically storing these books, delivering them to stores across the country, and then paying for their shipment back to the warehouse and, ultimately, destroying them. When the “push” strategy coincides with popular appetites—the spike in sales of Julia Child’s memoir and cookbooks surrounding the release of the Nora Ephron movie Julie and Julia in August would be a case in point—it works well. But such outcomes are increasingly rare.
The diminished ability of the fat front end of the Long Tail to redeem such extravagances is as disappointing to the large publishers as the diminishing profits of its back end are to big and small ones alike. All publishers would prefer to be able to avail themselves of the massive amount of work they have invested in past titles, once the trade’s steady earner. But as if the effects of the new digital environment were not challenging enough, the problem for a publisher of a new book’s increasingly tenuous chance at being a part of the conversation is compounded by a concurrent web phenomenon at the lower end of the Long Tail that, in book publishing, has particularly masochistic aspects—and that is the problem of “free.”
Last February, Google announced that more than half a million “classics” (that is, public domain titles where no copyright is paid) would be available through its Book Search program. No other entertainment industry legitimately provides its proven backlist sellers gratis. Any recording of a work by Beethoven, Maria Callas, or Ernie Ford is going to cost something on iTunes—copyrights are traded and at the very least there will be a performer claiming dues. And yet in the book world great masters, such as Dickens, Tolstoy, or Austen, can be had for nothing. On Main Street, nearly free titles are available at second-hand and remainder stores. But the availability of a half million books for absolutely nothing—offered not just by Google but, in Canada, to purchasers of the Sony Reader—is presumably applying even more downward pressure at the thin end of the Long Tail, usurping more reading hours and dragging down the prices of e-books if and when publishers decide to produce them. And it’s not just a question of all those “classics,” or of all the in-copyright books that clever Internet sleuths can acquire somewhere without paying, but of “freemiums” as a strategy: last summer, for instance, when the fourth book in James Patterson’s series Maximum Ride was released, readers were offered the first one free as an e-book download. More bought reading time lost.
Then, in October 2008, Google settled a three-year legal battle with the Authors Guild and several publishers over the digitization of more than seven million books it was able to acquire by furnishing the American libraries from which they had been “borrowed” with PDF copies of the books in question. A book could end up in the incipient Google Books registry if even a single copy sits on a library shelf anywhere in America; the onus is on writers and publishers to alert Google that their books are in the collection, and that they are thus entitled to a portion of whatever revenue it generates.
By copying the books first and negotiating later, Google has, in effect, established itself as the biggest pirate in the world—imagine the political outcry if the Chinese had tried it. And while its copyright access agreement was fashioned in the United States, it affects publishers everywhere, though as yet the only state to have had the gumption to object is Germany, and the only major corporation is Amazon, a competitor that at least asks permission to scan. Now, however, the practice of obliging producers to claim their copyright is an industry model. In August, the illegal peer-to-peer, file-sharing website the Pirate Bay was purchased by the legitimate Swedish firm Global Gaming Factory, a company that is behaving exactly as Google is doing—posting first and settling later. Canadian authors affected by the Google settlement were given until September 4 to opt in or out, marking the moment when the webification of the Canadian publishing industry was no longer a theoretical debate.
Google’s copyright access agreement has vapourized previous ideas about “fair use” of a writer’s material and delivered a rude body blow to publishers that have historically traded territorial publishing rights as part of their portfolios. As with Amazon, 20 percent of a book may be viewed online, versus the limit of about 300 words that a newspaper, broadcast show, or magazine may excerpt without payment. Furthermore, if the edition of Gil Adamson’s The Outlander that Google may have acquired from a Vermont library just happens to be Australian, perhaps the donation of some generous relative passing through, then even if a subsequent online purchase is made from Canada, the royalty and other revenues will accrue to the Australian publisher and not the Canadian one. In the strange, borderless world of the Internet, it thus makes more and more sense for publishers to purchase world rights—assuming they can afford them.
At the moment, the income that stands to be generated from Google Books and its nascent registry comes from a cut of the advertising on a book’s associated web page, but the company has made clear that it is preparing for all sorts of revenue models in the future, from links to related sites to direct sales and digital downloads. Interestingly, it is even contemplating price “bins” in which books will be priced on a scale that rises and falls according to demand—a move that disregards the cost of producing a book entirely, with dire repercussion for publishers striving to recoup advances to authors and all the other costs of production that are required even in the electronic world.
With Google paving the way, all sorts of companies are joining in the melee. The website DailyLit.com sends chapters of selected books to computers, mobile reading devices, or cellphones in sequential parts, daily. Much of its repertoire is, at the moment, made up of “classics” (those free books again), but this includes, for instance, The Curious Case of Benjamin Button, available in eleven parts for free—a piece of backlist that, what with the movie release, might have earned a tidy sum for its publishers. Dialabook.net, calling itself the “biggest excerpt distributor in the United States,” purveys the first chapters of, at last advertised count, 235,000 books to libraries and bookstores and other clients across the United States, charging publishers for the service.
In Canada, Mark Scott, the CEO of Douglas & McIntyre, has developed his own digitized book site; BookRiff allows readers to compile their own bound texts from individually purchased chapters as MP3 users would playlists. BookRiff seems an unlikely proposition beyond, perhaps, travellers wanting that ultimate guide to Borneo, cooks wanting an array of favourite recipes, and students collating a master reference text, but it is easy to imagine a lucrative future for it as a hand-held application. Indigo recently launched Shortcovers.com, a book sampling site that enables users to read first chapters of books for free and buy subsequent chapters at $0.99 a shot (or the entire book at market prices). “Mix, mash and match your favorite reads!” the site urges. “Compile collections of short stories, speeches, articles, interviews, chapters and more under your favorite themes. It’s the fastest way to organize and share content that motivates and inspires you.”
There isn’t a publishing company in Canada that does not spend a good part of its working day grappling with the challenges of the book trade’s new reality. The transformation to a mass-market frame of mind—one that sees a revenue stream in 40,000 units of a book, whatever its actual form, sold at $9.99 rather than 10,200 at $38.95—is daunting, but publishers have no choice but to adapt. Not that the news is all bad; until this past year, iPhones and other mobile devices with MP3 and video capabilities were seen to be “competing for eyeballs,” in industry-speak, to the detriment of the traditional media. Now they are seen as part of the cure—the fount of a potentially dramatic increase in the total sum of reader hours. And digital technology may also be the thing that finally solves one of the industry’s most intractable problems, which is that of returns.
The practice of selling books on consignment was initiated during the Depression by the New York publisher Max Schuster as a means of bolstering the liquidity of bookstores struggling in cash-strapped times. The booksellers paid for the books on consignment, so that the copies they did not sell could be returned. The idea was the salvation of the industry, although its benefits have been distorted over time. Everyone knows that the system is expensive, wasteful, and often manipulated by bookstores as a means of settling accounts through the shifting of inventory over different costing periods. Everyone knows that all the unnecessary trucking of books only adds to the extraordinary carbon footprint of an industry that, according to Michael Tamblyn, the former CEO of BookNet Canada, annually produces approximately 24 million more books than it sells.
And yet, despite years of half-hearted debate, the system persists. According to a BookNet Canada study in 2008, retailers and publishers of all sizes are in favour of the system. Larger publishers use it to their blockbuster ends. Smaller publishers and, less reluctantly, independent bookstores favour the custom, too, as it is just about the only way that even a single copy of a novel by a lesser-known author, or even an important backlist item, is likely to be stocked at all. The returns system, says Silver, favours culture and the consumer because it allows Indigo, the biggest player in the industry, to keep its stock “fresh.”
Digitized publishing stands to revolutionize the industry as surely as Schuster’s returns policy did almost eighty years ago. Electronic books, delivered as digital downloads or as files to be printed as books on demand, eliminate the headache, expense, and waste of a warehouse and offer a reprieve for the environment, which customers completely disregard as they participate in an industry that permits the felling, in Canada alone, of approximately 200,000 more trees than are necessary to support actual sales. The remaindering of a book—or, more often than not, its pulping—is what used to end its life; but now, as a digital download, it can remain “in print” indefinitely. And the backlist that used to provide as much as 70 percent of a publisher’s profits (large publishers, as much as the small ones, note, would like to have this gravy back) stand to do well by digitization, too, as archiving books electronically is one way of making them “available” without allotting any significant expenditure to their place on the book world’s very long tail.
Some publishers, though none as yet in Canada, are actually moving toward the production of books solely as electronic files, with print runs made only after actual orders. In a press release, amusingly titled “The Point of No Returns,” Colin Robinson, previously at Verso (the early publisher of, among other notable authors, Christopher Hitchens), recently announced with John Oakes the formation of the new imprint OR Books. As did his previous press, OR intends to publish “progressive works of fiction and non-fiction” but to sell these books directly to customers, predominantly as e-books; the company will go to press on actual paper only for committed bookstore orders.
In the new world of digital book delivery, all sorts of models are being examined to see just what sums of money can be extracted from a limited pool of readers to pay for a product with inputs that nevertheless remain expensive. True, the digital delivery of books dispenses with a range of costs, from warehousing and inventory control to transportation—all the debilitating costs of the returns system—but it is, as Susan Renouf describes it, still a “fallacy” to believe that digitally delivered books cost nothing to make. All books require writers and editors and marketers and salespeople and accountants, and so on. And yet digital is where the puck is going to be, and publishers have no choice but to skate toward it.
Jeffrey Remedios worked with Virgin Records before 2003, when he formed Arts&Crafts Records, the musicians’ collective that put Broken Social Scene, Charles Spearin, Apostle of Hustle, and Feist on the world stage. Arts&Crafts might easily be compared to a mid-size independent Canadian book publisher, and Remedios, who acts as manager, publisher, distributor, and general organizer to his collective, sells 25 percent of his company’s music digitally—roughly 10 percent higher than the industry average. “Generally speaking,” says Remedios, “the smaller the company, the higher digital sales will be, because the smaller the release is, the harder it will be to find a physical copy.” Eighty percent of Arts&Crafts’ digital sales are achieved through iTunes, where, as Remedios puts it, “everybody gets the same shelf space. The front page can’t be bought.” The iTunes pitches that show up in users’ inboxes are chosen by the company’s “curators,” and not through paid co-op. Remedios is a fan.
When I ask him what advice he would offer book publishers about to confront a new digital reality, he says, “Don’t fear change. Embrace it. Allow the technologies to remould your role. There is no future as a gatekeeper of the status quo.”
Remedios believes that, in time, the music industry will sell subscriptions to a library from which consumers will be able to download what they want, when they want—a consumer’s “pull” heaven. Joel Silver, whose Shortcovers.com has come the closest to imaginatively replicating the iTunes music model (and pricing scheme) also wonders if a club membership model will eventually come to pass. Of course, e-book and on-demand sales are as yet too small to measure. Last year, when I spoke to Morgan Entrekin, the American publisher of Grove/Atlantic, he’d sold more than 400,000 copies of Anne Enright’s The Gathering but only 250 electronic downloads. “Publishing stories in book form is what I do,” he said obstinately. Still, the market for digital reading devices, not yet two years old, is picking up pace dramatically. Sony Canada, the company that produces the Reader, claims sales of mobile reading devices already exceed those of iPods at a similar stage in the player’s evolution.
In 2008, Sony sold about 350,000 units in the United States. In the same year, Amazon, its principal competitor in the field, sold about 500,000 Kindles (which are not yet available in Canada because the company hasn’t sorted out compatibility issues with Rogers, the network that would enable its wireless downloads). Sony won’t supply exact figures but says that the rate of sale and market penetration in Canada has been almost double what it was during the initial period in the United States. (The PRS 505 model was released in Canada in May 2008 and retails for $349.99; the 700 model has a touch screen and an annotation program and costs $449.99.) Ironically, the mobile reading device that had a head start on all the others was Apple’s iPhone, but the company’s CEO, Steve Jobs, was famously disinterested, believing, as he told the New York Times website, that Americans had stopped reading. Now the iPhone is playing catch-up in a market that Sony Canada’s senior director of marketing Junior Ali says “is bigger than television.” Stanza, the free third-party mobile reading program produced by Lexcycle for the iPhone, was downloaded more than two million times in its first year.
It is difficult to pinpoint exactly when the acceptability of mobile reading devices reached its tipping point, but in Canada it may have been when Sony provided Random House and then smaller publishers with free first-generation Readers for office use. In my own house, it happened around the time that I acquired a Sony Reader 505, and my wife, a book publisher, borrowed and never returned it. I have yet to use it, and when I’m travelling, with perhaps a dozen books in my suitcase, I envy her the light and immensely portable conveyor of digital reading. At the same time, however, a psychological revelation occurred to me that was every bit as, if not more important. For at home, I found myself contemplating the stacks of books in the front hall, in the office, and in the libraries upstairs and down. Without having noticed when the tipping point occurred, I realized that, whatever my aesthetic preference for physical or electronic delivery, the books on my shelves had taken on an arcane aspect. Sure, I could share them, but they had become like museum pieces reflecting my tastes at particular moments in time. They no longer spoke to the way I actually read not only books, but also hoards of other material online. My library was as quaint as a Dodge RAM truck in a hybrid Smart world.
I was not about to dispense with my paper books, of course, but there was no going back. The future was already here, and e-books were a product I was wanting.