Unbundling: The Fourth Main Force Shaping 21st-Century Book Publishing

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August 2013
by Mike Shatzkin

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Mike Shatzkin, founder and CEO of The Idea Logical Company, has been an industry consultant for more than three decades. His blog, The Shatzkin Files (idealog.com/blog), is the source of this article and offers links to speeches and posts that document the evolution in his thinking in this area.


In the July 2013 Independent, I looked at three of the four big forces driving the future of publishing: scale, verticalization, and atomization. Another trend—unbundling—belongs with them. The book business, in the trade segment I follow most closely and in every other segment as well, is seeing its value proposition becoming unbundled in a number of ways.

Until very recently, a trade publisher controlled just about every aspect of a book’s publication. The indispensable parts of the value publishers offered were two: the advance against royalties that often provided essential financing to enable the writer to create the manuscript, and the network of relationships and infrastructure that put books on shelves for consumers to find and buy.

Because the publisher was taking both a capital and reputational risk with every book published, it was natural that it would handle all the supporting steps: developmental editing and copyediting, marketing and publicity, design and manufacturing. The publisher would commission the artwork for the book’s cover and determine the best foot forward on flap copy.

Before the turn of the 21st century, it was the exceptional author who had any kind of “platform” that could be employed for a book’s marketing: something like a TV show or newspaper column or fame achieved some other way that could be a springboard for promoting the book. In the cases where those opportunities existed, publishers recognized that the book was being piggybacked onto something that had its own commercial purpose and was not subject to the wishes or timetables of a book’s publisher.

What changed before the publishing business changed is that many of us have some sort of platform now, as a way to reach an audience. And, although my platform isn’t comparable to Rush Limbaugh’s or Jay Leno’s, it is, indeed, mine all mine, and I can do what I want with it. Many other people have platforms of their own that are far more powerful.

Services for Sale

It could be said that publishers themselves began the unbundling process as they got authors to use their own platforms to market their books. With the advent of e-books and driven by the CreateSpace services offered by Amazon, it became possible for any author to publish a book, and authors who had a platform, or were even just building one, no longer had to get the assent of a publisher to put their books into the market.

My friend the futurist David Houle (whose new book Entering the Shift Age has been published by Sourcebooks), was frustrated in 2007 by his inability to connect with a publisher. He was just starting his blog, Evolution Shift, and it didn’t have enough history or audience to persuade any publisher he found to put out his companion book, The Shift Age. So he did it himself, through Amazon, even before there was a Kindle.

Over the years, David has sold about 7,000 copies of this book, many through Amazon but many more through his public appearances as a speaker. (And what he’s made per copy is far more than what he’d have made with a publishing deal.)

Since Houle published The Shift Age several years ago, an industry has grown around providing services for publishing. The core offerings of this “author services” business involve taking the creator’s file (in Word or InDesign), making it accessible in various e-book formats at the front end, and then interacting with e-book retailers at the other end by delivering the file and capturing the sales information and the revenue.

Authors can get this help from the retailers themselves but Amazon, Apple, Barnes & Noble, and Kobo don’t push the e-book out to other e-book retailers, and Amazon is the only one to offer a companion print option.

The first mover on these services in the e-book age other than the retailers was Smashwords, which has now been joined by a host of others. Author Solutions, acquired about a year ago by Penguin, rolled up a number of companies that offered these services in the print-only world that existed before Kindle. And all of them have come to recognize that publishers provide more than the essential services at each end of the publishing process; they also provide editing and packaging and marketing services in the middle. So these have popped up as discrete offerings—“unbundled”—both through the complete service providers and as stand-alones.

Now there’s an aggregator of the stand-alone service providers, BiblioCrunch, which features a host of freelancers any author can access. Another fledgling, NetMinds, makes provision of expert services in many categories a part of its model.

This unbundling effect plays out in interesting ways. When Hugh Howey sold the rights to his smash success Wool to Random House UK (before he had a U.S. publisher), the publisher worked with Howey and did some editing, including creating an additional chapter, for its edition. Howey was able to make that component of Random House’s work available for the print edition he licensed in the United States to Simon & Schuster, and to incorporate it into the e-book version he sold himself.

What’s Missing

All of this evidence that the publishers’ proposition is being unbundled leads to two strategic observations.

As the services game shifts from “authors” to “entities” (what I call atomization), a critical job description is missing from the service offerings. That job is “Publisher”: the one who makes the overall decisions about the editorial, production, and marketing resources that are committed to each book.

This role could occasionally be useful in the author services environment, but in most circumstances it would not be missed. There is no “what to publish” decision; the author has a book. There are very limited “resource allocation” decisions because the available resources to allocate are the author’s own.

Although there are 26 categories of helper available in BiblioCrunch, “Publisher” is not one of them. But as entities of all kinds take over from authors as the primary providers of books outside the industry itself, the role of publisher becomes critical. Decisions will need to be made.

I met recently in Los Angeles with a team of producers and development executives who are acting on an idea I have pushed: Hollywood can become an important center for fiction book publishing. It has a core resource of thousands of great stories that were developed in hopes that they would become movies but that haven’t, so far, been funded, or as they say out there, “greenlighted.”

This particular team has more than 100 projects that are candidates for its book-publishing efforts, but it can’t just “do them all.” The team has to set up a company, pay to turn scripts into novels (or, at least, narrative stories), and put them into e-book and probably also print book formats. So, they asked me, Which ones would you do first?

I said, “I wouldn’t ask me. I’d ask a publisher.” I named two very good and experienced ones immediately who are currently unemployed. These people have vast experience with all the decisions that are required: which stories are most saleable as books, what length the books should be, what style they should be written in, and how they should be titled, packaged, and promoted.

The need for a publisher’s expertise is even more evident in connection with nonfiction entities that might become publishers. If every museum, library, and department of a university is a publisher waiting to happen (and I believe all of them are), how could any of them proceed without someone in the publisher role?

If you were trying to get a museum started on becoming a book publisher, you’d begin with a discovery process that asked key questions. Who comes to the museum and what do you know about them? Who comes to the museum’s Website, and what do you know about them? What intellectual property does the museum already own that could be publishable as books? What good IP could it lay hands on to publish as a book? What is its relationship to sources of IP and marketing, such as academic institutions, not-for-profits, or other museums? If you asked supporters of your museum for money to fund a publishing program, would they give it to you?

What the publishing program should be in response to the answers to those questions is something only a publisher has had real experience figuring out. The publisher is the first service the entity needs. Renting a publisher takes precedence over renting an editor or a cover artist.

A wildly expensive ($625) cookbook series—Modernist Cuisine: The Art and Science of Cooking, created by Nathan Myhrvold, the former Microsoft executive—underlines the point. Ingram Publisher Services had a great success with the series. Perhaps lost in the reporting of that story is the fact that Myhrvold’s first step was to engage Bruce Harris, formerly publisher of Harmony Books and a former Random House sales executive. Harris has “publisher” in his DNA, and he undoubtedly shaped key decisions—probably including engaging Ingram in the first place, as well as directing its activities—that were instrumental to the success of the project.

So the first strategic point is that hiring all the services without hiring a publisher is like having a football team without a quarterback.

What’s Coming Undone

The second strategic observation is that the industry itself, but particularly the trade component of it, is also being unbundled. Disparate efforts that bookstores aggregated and welded together are now coming apart.

Here I’m not thinking about the value chain for each book, which is overseen by the publisher, but about the value chain for the industry, which includes the supply chain.

Although there have always been some bookstores that served special-interest markets, in New York City until a few years ago they ranged from specialists in architecture to specialists in mysteries. Most books were sold in general bookstores that sold titles about everything.

Now, as publishers are forced to reach readers in different ways than they used to, the subject of a book, and the consistency of audience appeal within a publisher’s list, become key to its marketing in ways they never were.

At the same time, e-books are creating a distinction between books that are meant to be read from start to finish and all other books: art books, illustrated instruction, references, and compendia. Narrative writing, particularly fiction, works as e-books. The others don’t. That increasingly encourages publishers who depend primarily on narrative reading to stick to it and to not publish books of other kinds.

And this creates a differentiated distribution problem for publishers, depending on their output.

Publishers of novels and narrative nonfiction are seeing the decline in their print book sales compensated for by increases in their e-book sales. They have a new challenge reaching the audiences and making them aware of particular books, but their problem isn’t exacerbated by the format change. Many of their readers simply switch over from print to digital on whatever device they want to use, and one-color straight text printing lets publishers reduce print runs without pushing costs completely out of line.

But that’s not true for publishers of other kinds of books. As bookstores close and readers switch to digital formats, these publishers face existential questions. They can’t suffer the print run reductions readily. They can’t just make a digital version by copying the print. And, if they did, it wouldn’t sell.

Some publishers of illustrated books have robust distribution outside the bookstores, to museums or gift shops, for example. In some cases, the book trade was already a diminishing share of their business before the e-book revolution happened.

But the impact of digital change on publishers that used to all depend together on a healthy bookstore network is very highly variable. Their fates were joined. They’re now being unbundled.

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