Thursday, July 21, 2011

The Man Behind the Curtain

The Big 6 publishers' ire and animosity toward Amazon for venturing into publishing waters is not unexpected. It is, however, laughable when considered in light of other forays in the publishing world.

Where was their anger when the Big 6 began offering their books to Wal-mart, grocery stories, and big box outlets? Were they not cutting out the sales that bookstores should have received and creating a monopoly whereby drug stores, grocers, and big box outlets were selling books as well as other goods? Borders no doubt failed to appreciate the irony of the move. After all, people spend far more time in those stores than in bookstores, like Borders, browsing the shelves for necessities, so picking up a book at the same time is little more than good time management. Get the product to the consumer in the best way possible. I guess buying a book at a bookstore is passe, and no one mentioned the monopoly word.

Then there were boutique and micro publishers -- aside from the university and college presses, which were no threat to be begin with -- that entered the publishing fray and the Big 6 yawned. How could a boutique publisher come within shouting distance of being a threat? They didn't do what the Big 6 did, and a new crop of possibilities opened up for authors. Smaller advances and nowhere near the Big 6 budget for advertising and marketing, but legitimate publication -- on a much smaller scale. What's to worry?

Then Amazon entered the arena and the crowd was silenced, their silence followed by oohs and aahs of wonder and possibility, and the Big 6 called, "MONOPOLY!" and demanded something be done. Where was the monopoly when they parceled their books out to retailers already selling so many other articles, including food, furnishings, electronics, televisions, games, software, cameras, and everything else under the sun. Why isn't Amazon, an outlet for all those products, and books, suddenly a threat?

Because Amazon can command as much money as the Big 6. It is in the end all about money. In this instance, it's the Big 6's money.

Consider what a publisher does. A publisher is like a bookie with lots of money and the one place where bets can be made. Since the publisher has the wherewithal to showcase and fete the jockey, outfit the horse in the finest silks, and bankroll the whole project, who do the touts bet on? The horse that will earn them a modest return on their food and rent money. Only suckers bet on horses with big odd, praying for a fluke or a miracle to pay off, and sometimes it does. It's all about the show -- and money runs the show. Win or lose, the biggest wad of cash goes to the house. The house has the best odds.

A publisher chooses an author, or the author's work, fetes the author, puts their money and talent to work showcasing the author, and telling everyone that this is the real deal. People listen. Books are sold. Author makes some money, but the real money goes to the house. Win or lose, the money is with the publisher -- the house. But what does a publisher actually do, beyond the showcasing, tarting up, and talking up the author and his words? Not much.

A publisher usually publishes nothing. A publisher is a clearing house for copy editors, proofreaders, artists, salesmen, marketing and PR representatives, and editors. Very few publishers own the printing press. They usually rent or subcontract the work to an actual printer, and no one is the wiser, until now.

Amazon, with its deep pockets and its own printing press, approaches authors and says, "Look. We have the resources and we'll pay you good money to let us print and market your work. We list the product at basement prices, but we will give you a big percentage of sales. How about working with us?"

Amazon has the distribution -- publishers have used them for years to sell books -- and is hooked into the biggest mall in the world -- the Internet. Bigger percentage, even on lower prices, sounds like a good idea. When the numbers are crunched and the contracts offered, what can an author do but sign? Amazon has just outdone the Big 6 and that is why they are calling foul.

It comes down to semantics. If you know how the business works and can break it down to its basic components, then manage the components in a more effective and lucrative way, you can take over the market.

Borders is a lost cause. Whatever the reason for its demise, the Big 6 definitely helped push them over the edge by distributing books through retailers, chain stores, big box stores, and grocers, bypassing bookstores completely. Talk about monopolies. Get your groceries, your prescriptions, and a book to read while shopping, and the gas and time saved is worth it. It's just not worth it to bookstores. It's called consolidation and not monopoly -- at least in current business parlance. After all, bookstores don't have the deep pockets of Amazon and can't afford to bite the hand that feeds them -- less and less each year.

Even with the move to digital publishing, the Big 6 still haven't figured out what's what. By pricing digital books out of the market at near the cost of hard cover, they are bleeding red ink all over their bottom line. The bookies have tanked it and don't know how to make up the loss because someone changed the odds and another house has almost all of them. Authors are fleeing the Big 6 like a a nerd trying to get a date at a sorority house mixer.

Some authors will stay. Someone always stays with what they know, but authors who know more about how the business works will step away and choose a bookie with better odds and a higher payout. It's loose slot machine time and the marks are lining up to cash in.

We live in a volatile and changing world where the marketplace is undergoing major changes. Those businesses that move with the times will prosper as they morph into a different business model and the rest will go the way of Borders. As more elements disperse through the marketplace, more changes will cause further destruction and construction and the world as it used to be will become a point along the historical time line.

Amazon isn't really monopolozing but maximizing business and giving the people who make books possible -- the authors -- a fair shake. Amazon doesn't need to put on a show and live the high life because they found that it is better to sell a thousand widgets at $1 than to sell one widget for $1000. It's the same number on the bottom line, but the column that totals widgets sold tells the real story.

I have a bit of advice for the Big 6. Had you paid attention to producing more books and sharing the profits more generously, you could still be the biggest bookie in town. Greed goeth before the fall. You've taken down Borders. Who will be next? Monopoly? I don't think so. It's just called business.

The man behind the curtain is pulling the levers and you've been watching a special effects show of pyrotechnics, mirrors, and lights. Keep an eye on the man. That is where all the action happens.

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