Global State of Consumer Publishing

PricewaterhouseCoopers, one of the big accounting firms, released a report on the state of global consumer publishing. When you look at the results, they may leave you wondering just how bad, or good, things are. For example, the total market has grown about 13 percent over the last five years. Good right? Well, not really, because you have to see these things in context, and in this case, context is how businesspeople and investors look at numbers:

• The growth was about a 2.6 percent per year over the five years.


• The real boost was advertising revenue, at a compound annual growth rate of 4 percent. But circulation revenue grew by only 1.9 percent.


• PwC expects 18.6 percent growth in the industry over the next five years, with advertising representing most of that.


• But online advertising is growing a lot faster: a compound annual growth rate of 38.1 percent from 2004 to 2008. As a comparison, print advertising was up 4.4 percent and newspaper advertising by 2.4 percent.

The problem this creates for publishers, at least those that are publicly-held, is that investors like high growth. That's because high growth businesses rapidly increase in value, creating the possibility of selling investment and getting a good return on the money they put it originally. It's not that consumer publishing is moribund, but that it can't grow fast enough to suit investors, and so managers feel pressure to "improve" performance. That's why you can expect to see more budget cutting in all areas, including personnel. My bet is that at a lot of publications, that will actually mean less staff and fewer freelance assignments. Management is happy to take staff, stretch them thinner, and then require more from them. That's one way to make more money from the investment, improving return to court investors.

Some other things to learn from the study:

• Most consumers like print, but many are also interested in interactive digital content.


• Younger consumers want all content online.


• People will pay for digital content at most half of what printed content brings. Although publishers might want to call this a reason to drop freelance rates, there's a lot of cost to a printed pub that simply goes away. That's got me wondering whether online pubs, given more development of ads, might be more profitable than print.


• North American and British publishers expect to derive a fifth of their revenue from digital publications within the next five years. Europe as a whole lags behind.


• The most successful at making the switch are those that "leverage strong brands across multiple media platforms and generate revenues from online advertising, search-engine marketing and e-commerce." In other words, the publishers that have best shifted online are the publishers that have been most successful at it.

Amazon Buys AbeBooks

Canadian online book reseller AbeBooks announced today that Amazon is acquiring the company

AbeBooks will continue to operate as a stand-alone business with all aspects of AbeBooks’ bookseller and customer experience remaining intact. AbeBooks’ headquarters will remain in Victoria, BC, Canada, and our European offices will remain in Dusseldorf, Germany. We will continue to support both our international marketplaces and our domestic marketplace here in Canada. I will continue to lead AbeBooks.

We expect this change to allow AbeBooks to expand its offerings and introduce new features and services to enhance the book buying and selling experience. Amazon is committed to further developing the AbeBooks brand and building upon the success of the past 12 years. This is not the first time AbeBooks has changed hands since being launched in 1996. Hubert Burda Media, a German media company, took a majority shareholding in 2003.

First, I find it very hard to believe that the "we want to keep you as you are" was either sincerely delivered or ever said. Large companies don't generally do acquisitions in closely aligned businesses to keep them running as standalone entities, and the AbeBooks referral model to third party resellers is exactly what Amazon does. Put the two together, and you have fewer markets for books, and more control in one set of hands.

As Amazon has shown with its push to force publishers using POD to get their service from the online giant, it wants to dominate the book industry, both as a reseller and as an industry vendor. They've been trying to lock up business on the Kindle, and I wouldn't be surprised at all if the company soon bought a book publishing outlet. They could print their own copies, they already have distribution and warehousing, and, with a smart acquisition, probably could do at least as well as Barnes & Noble.

Now you can expect Amazon to push on the used book presence it has let tiny third parties pioneer and develop on its site. I suspect it will be another major blow to the industry independent resellers, many of whom have found that the only way to make a living was to shift to online selling.

I have had nothing against Amazon on principle, even with creating a market for used books. But the company is trying to control too much, and that is clearly bad for the industry as a whole. It may be that they think they are "saving" the industry, though I'd bet that most of the managers' time there is simply spent on how to keep growing their own company.

Market Analyst Suggests Explosive Growth for E-Books

Many of us have been wondering just how e-book sales, particularly with Amazon's Kindle, have been going and just how they could change the industry landscape. There's an article on that very topic:

Pacific Crest analyst Steve Weinstein argues that global e-book sales at Amazon could reach $2.5 billion by the year 2012.

To figure this, Weinstein starts with the handiest analogue: iPod and MP3 player sales. He notes that between 2003 and 2008, digital music sales grew from 2 percent of the US market to 33 percent, largely on the back of Apple's ( NSDQ: AAPL) twin offerings. He doesn't expect the Kindle/e-books to track as fast, but he does think the market is off to a strong start already, and that the cycle will pick up steam as the Kindle comes down in price (that's already started) and the ecosystem matures. He also suspects the consumers will be drawn to the instant gratification aspect of Kindle titles, as well as the lower price per book.

MP3 music and e-books aren't exactly the same. People had wanted to buy single tracks for years and not be forced to purchase an entire album for one or two songs. However, they are analogous and the logical is reasonable, I think. Read the article and pay particular attention to the projections he's making for Amazon's profits. Part of that comes out of far lower costs (no manufacturing, warehousing, or shelving), but I wonder how much would come out of the pockets of publishers and authors.

Some Notes on the Print Front

Let's start with an interesting piece by London-based Fortune editor-at-large Richard Siklos, who looks at a range of opinions about, and strategies for, the print news business:

• Rupert Murdoch thinks that print will be around for at least 20 years, or until after his death.


• Sam Zell had decreed that the Chicago Tribune (I originally typed that as Tribute, which perhaps is apt) and LA Times will have 50-50 splits between editorial and advertising, and is reducing the news hole to reach that. To be fair, magazines have done this for many years as well. It's just that Zell seems determined to destroy his newspapers' abilities to deliver news to achieve this goal. And he wants to measure the productivity of journalists. Good luck - I'd like to see the "manager" who was able to get as much done in a day as a newspaper reporter must routinely.


• US News & World Report is going to bi-weekly issues and might as well become the US News & World Report About Health and Money.
  
• The Christian Science Monitor may shift from a daily to weekly format.

But it may be that all the business issues ignore a significant factor of people's underlying reading habits actually changing. Andrew Sullivan, writing in the London Times, finds that he now approaches text significantly differently than before the Internet:

In researching a topic, or just browsing through the blogosphere, the mind leaps and jumps and vaults from one source to another. The mental multitasking – a factoid here, a YouTube there, a link over there, an e-mail, an instant message, a new PDF – is both mind-boggling when you look at it from a distance and yet perfectly natural when you’re in mid-blog.

When it comes to sitting down and actually reading a multiple-page print-out, or even, God help us, a book, however, my mind seizes for a moment. After a paragraph, I’m ready for a new link. But the prose in front of my nose stretches on.

His piece is interesting, worth reading, and disturbing. If someone like Sullivan has a difficult time facing a page of uninterrupted text, what does that say for most people? And how could this change the way writers approach their craft?

A third article may have some answers: Michael Agger in Slate on how people read online. He starts off with a bit of parody on usability expert Jakob Nielsen. There's an interesting fact that he attributes to Nielsen: on-screen reading is 25 percent slower than reading on paper, at least when it comes to conveying information.

Consider for a moment that your reading speed was suddenly slowed by a fourth. Would you keep reading as much or as often as you do? Or would you get frustrated and either try skimming or completely move to a different activity? The reader cannot change the experience, other than by walking away, so Nielsen argues that the writing must change:

• highlight keywords
• use meaningful subheadings
• rely on bulleted lists
• include only one idea per paragraph
• use the old newspaper standby, the inverted paragraph, with the conclusion at the top
• cut the word count by at least half

Definitely click on the link and read to the end, including an example where Nielsen's lab tested multiple variations of a single promotional message.

An E-Paper Roundup

Technology can have such an impact on the world that sometimes you need to keep in touch with new developments if you want your head to stay above water. I think e-paper is such a technology for the publishing business. This Kindle is just the beginning: these low-power, high contrast screens can start putting content anywhere:

E-paper displays are already showing up in consumer applications, even though consumers may not recognize them. Jennifer Colegrove, an analyst at market researcher iSuppli Corp., identified several product categories in addition to e-book readers, including displays for wearable and carryable products like watch dials, cell phones, credit cards and security-system cards; instrumentation applications like the capacity meter on Lexar JumpDrive USB drives; and signage. Point-of-sale devices like electronic shelf labels can be updated remotely, Colegrove explains, or promotional signage can be updated by time of day -- breakfast specials in the morning, for example, and dinner in the evening.

That means almost anything could display content, possibly creating entirely new markets. Can you imagine writing marketing copy to wrap around a product? I'd recommend taking a look at this Computerworld article.

Some Additional Views on the Kindle

The Kindle gets press because Amazon is such a big name that has shown it's not afraid to bully publishers and authors. In fact, if the product really takes off, publishers are going to have an enormous problem; so far as I know, you can only get compatible content through Amazon. I think it's clear that the company wants to become the Apple of downloadable music: Make the device that people want and become the only significant source for satisfying your content cravings.

There has been some additional press on the Kindle since the Book Expo America (BEA) in LA a week or so ago. Paul Krugman in the NYT thinks that a predominantly digital e-book model will drive book prices down to nothing, where they become something you give away to promote other activities, like bands making money on touring, licensing, and merchandise. Danny Hatch's Business Common Sense blog had an entry about the Kindle and Jeff Bezos's pitch for it at BEA. Apparently Amazon claims that the Kindle actually increases print sales:

According to his research, for every e-book bought, Kindle readers buy printed books as well. Kindle increases purchases (e-books plus printed books) by a factor of 2.6.

Who knows what would actually happen? What I do know is that people tend to use forms of communication that work best for particular reasons. Sending e-mails can be fine, but don't replace all uses of the phone. Instead, you could argue that people used to use the phone for virtually everything because it was less of a time sink, but that it wasn't really practical for everything, like having a record of an exchange. Many types of reading you do in a book don't work well on a screen - at least in my experience, and I've been reading heavily from screens for about the last 25 years, literally.

There are some other potential impacts on the book business that the Bezos presentation suggest:

• Amazon wants every book in print available as a Kindle title, which they admit is a big copyright issue. As Hatch notes, is it worth making a Kindle version of a niche title that sells little? That's a tricky question: some, like Chris Anderson and his idea of the long tail, might suggest that digital was the only way to go in such cases. Maybe that type of title is only available electronically, or for POD. That would suggest to me that POD vendors would have to find ways to directly print from popular e-book formats so there isn't double production work.


• Bezos touted how titles never go out of print, leveraging that long tail idea of bringing in money with no investment in inventory or story. POD could offer the same, but in either case you must ask how your book contract reads, and when a title goes out of print and rights revert to you. You're going to want a minimum - maybe 500 or 1000 copies a year - on the number selling via e-book and POD combined. Anything under that triggers the out-of-print reversion clause. But if you don't get such minimums in a contract, you will be stuck for the 35 years it takes, at least in the US, for you to be able to legally recall all rights.


• The Kindle only shows four shades of gray for now, so books depending on illustrations and colorful displays might only work in print. If you don't like the e-book route, that is something to consider in your conception of the book.


• There is built-in audio, so it could become an audio book player as well. (And why not music?) Authors might want to revisit the licensing out of audio book rights, as they might become more important.

One more point that should be read in its entirety:

A member of the audience asked Bezos if Kindle would change what authors and publishers do? “Wait and see,” was the reply. For example, Kindle could revive the old Charles Dickens model of publishing serials—or partsworks—that come out in sequence. Also, unlike printed books, if statistics change, the new material can be inserted, so that the Kindle book is always current.

And it's back to Krugman's point that things could change for authors. No more second editions, for example, which would mean an end to significant continuing revenue for some authors. As for the Dickens idea, where would the parts come out in sequence? That worked for him because he could publish the books in parts in newspapers and then reissue them as full editions. But with newspapers dwindling and magazines feeling the crunch, what would the outlets be? And how about the other major part of Dickens's income - lectures and readings? Are you ready for lessons on how to effectively read on stage and therapy to deal with issues of stage fright?

Some overtly happier thoughts: when people download books, they probably cannot return them, as with buying software or music. Also, publishers no longer have the "returns" issue that makes them and their authors crazy. Can you imagine a royalty statement with no need for reserves against returns?

It could be a different world, indeed.

"On the Media" On the Book Business

If you write books, or want to, then you should read the transcript of a May On the Media broadcast. The NPR show about the media business spent some long minutes discussing the dynamics of the book industry, starting with where the books sell. For example, did you know that traditional book stores, whether chains or independents, only account for 40 percent of book sales? Online is important, absolutely - Amazon represents 11 percent of all book sales - but so are airports and Wal-Mart and toy stores and craft stores and Williams Sonoma. If your publisher only goes after bookstores, then it is not doing its job of getting copies out there.

As you likely know, there are fewer and fewer traditional outlets for book reviews and news. Newspapers have cut back terribly. So you need to find the gowing alternate routes: online reviewers and book clubs (And Oprah if you have any chance, because who else could cause about a million copies of Anna Karenina to fly off the shelves?). The probelm is the volume of books coming out each year is staggering: between 200,000 and 300,000 if you include self-published titles. Twenty or thirty years ago, that number was more like 50,000. It's like being in a room of screaming people. Who will catch your attention?

Jonathan Band, an adjunct professor at the Georgetown University Law Center, had the single-best explanation of what Google Book Search could do for the publishing companies and authors:

It will make books more relevant than they are today. Because right now, a lot of students, when they are given a research assignment, they just go to Google or another search engine. They don't see books, because books are invisible on the Internet.

I had never considered that, but that point alone could change my attitude toward books on Google.

The entire dynamic of how people consider books is changing. The show brought up the example of Touching the Void, which had sat around doing nothing for many years until Into Thin Air became hot and Amazon's automated suggested selling promoted the former during sales of the latter. Bang: best seller.

Back to the beginning: if you want to write books, then you need to read this transcript, because you have to get a sense of how far the reality of the book business might be from your preconceptions. That is, unless you have a trust fund or have no life and can afford to write books during all your "free" hours.

Call for Amazon Boycott

YouWriteOn.com, a popular UK site for new writers, run by the UK's Art Counsel, is calling for a boycott of Amazon. Apparently Amazon is expanding its punitive efforts beyond just the arm-twisting to force publishers that use print-on-demand technology into buying the services only from Amazon's own offering, which is anti-competitive and an attempt, in my view, to force monopolistic vertical integration into the industry.

Now, at least in Britain, the company is angry with publishers selling their own wares at a discount on their own web sites. To be fair, such channel conflict - when the sources of product undercut the price of a reseller - is considered by retailers to be poor behavior. After all, the reseller cannot possibly match the price of the vendor. But there is talk that Amazon may move beyond what I think might be reasonable dislike of the practice:

There are fears that Amazon may retaliate by regarding a publisher’s online price as the recommended retail price and applying its trading terms to that. If a publisher discounts a £20 book to £15 online and Amazon has a contract for a 50 per cent discount on the full price, Amazon would pay the company £7.50 instead of £10. Publishers say that this would be unfair and could ultimately drive up prices.

In addition, there are more rumors over what Amazon is demanding from the POD publishers whose buy buttons it has disabled:

One source claimed that the online seller recently removed the “buy buttons” from a book on its website to prevent users from being able to purchase it. “They then went to the publisher and said, ‘Give us an extra 2 or 3 per cent or we won’t put the buy buttons back’,” the source said.

An Amazon spokesman said: “It is speculation. We never talk about discussions with suppliers.” He declined to comment further.

So when will the pressure start ratcheting up in the US? Maybe it is time for all of us to take our purchases someplace other than Amazon - and to email Jeff Bezos (email address from Small Publishers Association of North America, or SPAN, whose executive director sent this email) to let him know how many people in the industry are distressed by his company's actions.

Authors Guild: Amazon Tightens Grip on Long Tail; Info Requested

I've mentioned Amazon's egregious and unprincipled decision to demand that any book publisher that wanted to use print on demand services use Amazon's own BookSurge service. The Authors Guild has a note with yet another angle - the desire to control this area of publishing. Here's the AG's view in its entirety, by their permission:

Last week Amazon announced that it would be requiring that all books that it sells that are produced through on-demand means be printed by BookSurge, their in-house on-demand printer/publisher. Amazon pitched this as a customer service matter, a means for more speedily delivering print-on-demand books and allowing for the bundling of shipments with other items purchased at the same time from Amazon. It also put a bit of an environmental spin on the move -- claiming less transportation fuel is used (this is unlikely, but that's another story) when all items are shipped directly from Amazon.

We, and many others, think something else is afoot. Ingram Industries' Lightning Source is currently the dominant printer for on-demand titles, and they appear to be quite efficient at their task. They ship on-demand titles shortly after they are ordered through Amazon directly to the customer. It's a nice business for Ingram, since they get a percentage of the sales and a printing fee for every on-demand book they ship. Amazon would be foolish not to covet that business.

What's the rub? Once Amazon owns the supply chain, it has effective control of much of the "long tail" of publishing -- the enormous number of titles that sell in low volumes but which, in aggregate, make a lot of money for the aggregator. Since Amazon has a firm grip on the retailing of these books (it's uneconomic for physical book stores to stock many of these titles), owning the supply chain would allow it to easily increase its profit margins on these books: it need only insist on buying at a deeper discount -- or it can choose to charge more for its printing of the books -- to increase its profits. Most publishers could do little but grumble and comply.

We suspect this maneuver by Amazon is far more about profit margin than it is about customer service or fossil fuels. The potential big losers (other than Ingram) if Amazon does impose greater discounts on the industry, are authors -- since many are paid for on-demand sales based on the publisher's gross revenues -- and publishers.

We're reviewing the antitrust and other legal implications of Amazon's bold move. If you have any information on this matter that you think could be helpful to us, please call us at (212) 563-5904 and ask for the legal services department, or send an e-mail to staff@authorsguild.org.

Feel free to post or forward this message in its entirety.

HarperCollins Tries to Cut Writer Advances

According to the New York Times, a new HarperCollins unit, yet unnamed, wants to substitute profit-sharing for author advances. It also will try to eliminate the liberal returns policy that bookstores have, in my view, at least, unreasonably enjoyed for decades. (In what other industry do you get to hold onto goods for six months or a year, send them back at the last minute, and then reorder to effectively extend that ability to return?) This part of News Corp. will also "release electronic books and digital audio editions of all its titles":

Author advances and bookseller returns have long troubled the publishing industry. Best-selling authors can command advances so high that publishers often come away with slim profits, even for books that are significant successes. Publishers also sometimes offer high advances to untested authors in the hopes of creating new hits, but often those gambles do not pan out.

Ms. Friedman said the new group, which will initially publish just 25 titles a year, would offer “low or no advances.” Mr. Miller, who was most recently president of Hyperion, said he hoped to offer authors a 50-50 split of profits. Typically, authors earn royalties of 15 percent of profits after they have paid off their advances. Many authors never earn royalties.

My "headline" reaction was to think, "Cut advances? Is there anything left of them to remove?" But let's take a moment and consider the pros and cons. Relatively few books actually earn out their advances, so that lump sum - often pretty measly money - has become the only sum writers see. There is definitely a risk in dropping the up-front money.

Let's consider the other side for a moment. Advances become one of the gating factors in getting a publisher to take on a title. If your main work is writing books, then, yes, you need the advance. But if you're doing books on the side, it might be that you'd have an easier time selling a title in the first place. Also, even books that don't earn back the advance are still often profitable. Now, if you sell 10,000 copies, getting half of the cover price, and you're aiming, as the article says, at about $20 for a hardcover, that is a gross of $100,000. At 15 percent before tax profit margins, that would be $15,000, or $7,500 to the writer. Not tempting, I admit. Furthermore, you get a cut of profits, so all the costs are going to come out first, and must get paid off for there to be profits. You'll see your money later than before, and now you have to deduct the time-value of money - because you're waiting, you're essentially losing about 1.5 percent or more a month (what it would take in credit card interest to cover the missing sum).

A few more problems. Royalties are hard enough to follow, and that's when you get a list of the numbers sold. But profits? How can you tell when costs are actually paid off? What is the definition of profit? That is going to be an enormous problem; ask any musician or person working in Hollywood who finds that immensely well-selling properties end up never having an official profit. Chances are greater that you'd need an audit to follow along, and that is going to cost you money unless you can show that you're being shortchanged. Contracts will get a lot trickier, because the definition of profit and what can be charged to the costs of a book will become critical. Most book agents simply are not going to have the background and experience to negotiate these terms, because they don't know where the problems will be.

Those are a lot of potential problems. Is there a positive? I'm not sure. If a book sells well, you get the split of profits, not of royalties. Here's where the flip side of paying off costs comes in. As the costs are paid, more and more of the book sales are profit. Eventually, that $10, minus maybe a per-copy manufacturing expense of $1.50 and some amount of corporate overhead (call it 50 cents), leaves you with a cut of maybe $3 or $4 per copy, rather than the $1.50 you'd make with 15 percent royalties. But I suspect you'd have to sell a whole lot of volumes to hit that mark.

There's also a problem in the reporting of the Times that might make the gains turn out to be nothing. Consider this sentence:

Typically, authors earn royalties of 15 percent of profits after they have paid off their advances.

Actually, that isn't typical at all; 10 to 12 percent is more typical, and you're talking about the money coming in to the publisher, which is more than the "profits" would be. And for hardcovers, which is what they will be doing, I'd say 7.5 percent off the cover price is more typical. That means it's really easy to figure out how much someone owes you.

The upshot is that things are changing quickly, and you're going to need really good advice - from a lawyer, and maybe even an accountant - as you go into book deals. Forgo professional advance, and you're likely to make a deal which leaves you with less than ever before.

It's the Archives, Folks

A story in Folio tells how National Geographic continues the argument that it can publish a software-enhanced CD version of the magazine without paying photographers additionally. The legal battle is going on 11 years, now. I won't recap the history; that's available at the link. However, I will note a specific paragraph:

“It’s the archive that’s at stake,” Angelo Grima, senior vice president and deputy general counsel for the National Geographic Society, said during a panel on digital rights at the Magazine Publishers of America’s Magazines 24/7 conference at the Hearst Tower Thursday. “We’ll go to the Supreme Court if we have to, because our archive is that important to us.”

Of course, this isn't just about photography. It's about "content." The real economic value of images or stories or graphics or video or audio is not the immediate market value of any single piece. No, it's having the collection - the entire collection - that is at issue. It is the collection that allows companies to sell rights to databases, to get advertising, to charge institutions for subscriptions. And every bit helps add to that value. That means the story you consider unimportant in the long run because it is timely, or short, or so specialized, has lasting value. Just because you don't grasp the value of a piece of antique furniture doesn't mean that you should toss the Louis XIV chair. No, you find out the value, and then figure out what you want to do with that value.

I know this probably seems like an old and tired argument to most of you, but it's vital and we have to remember it again and again. What we create has value. People want it because it does have value, both on its own and in a given context. When businesses want you to give up lots of rights, even non-exclusively, it is because they want to make money off what you have done. Don't you think it's only reasonable that you also make money from it?

The End of Paper Book Manuscripts?

Call it the beginning of the end - according to New York Magazine, Hachette Book Group has distributed Sony e-book readers to its editorial staff. Agents have to email files of manuscripts rather than sending paper. Apparently Simon & Schuster also has the devices (Amazon was too tardy with the Kindle), though only some of the editors actually use them. Unfortunately, there is no edit function, so editors can only read and not mark up documents, leaving some writers, I'm sure, cheering.

Did Maxim Review CD Without Listening?

Apparently Maxim rated a CD without listening to the entire album - and it's not even clear how much, if anything, the reviewer listened to. Here's something on one of my other blogs.

Content Strategists, Not Editors

The publishing world is changing faster than you might think. Well, you knew that, but here is one of the signs that ground under our feet is cracking. “We don’t hire editors anymore,” says Meredith publishing president Jack Griffin. “We hire content strategists.” Folio reported that remark and more about Meredith in this article.

But before getting into more of the article, again look at that quote. It indicates so much in perspective. The focus is on content, not writing. That means everything - words, images, sound, graphics - is part of the mix. The "strategists" part? These people are responsible for coming up with approaches to make money for the company. Once the strategy was pretty much taken for granted. Meredith, in this case, would find a demographic, devise an appropriate publication, put it together, and sell ads while trying to build the reader base. But the new concept acknowledges that a single direction, set by the top, won't work. Strategies that work for one group may not for another. The view also says goodbye to the concept of editor: someone who is focused mostly on getting articles from writers and getting them prepared for print.

Griffin was giving a talk at Folio's annual publishing conference. As part of this new role of content strategy comes a recognition that many of the assumptions that have ruled magazine writing for decades are going out the window:

Griffin, on crutches and hobbled by a recent emergency surgery to repair a broken leg, said the change American consumer demographics—specifically, the spike in Internet usage and the emerging “white minority”—forced the Des Moines-based publisher to evaluate all aspects of its publishing business.

Meredith, Griffin said, was “founded on the social construct of Dad at work, Mom at home, Chevy in the driveway.” For a company that publishes “white-bread” magazines, he said, “the change has been quite provocative.”

Meredith has spent about $600 million in the last six years in developing its online, interactive, and integrated marketing businesses. If you're longing for the days that you could make nice money writing for major consumer print publications, then you're in danger of becoming a dinosaur. Now's the time to move in new directions.

Martha Stewart: Side of Emeril to Go

Martha Stewart Living Omnimedia has just bought the Emeril Lagasse franchise: books, TV shows, and products. All it cost was $45 million cash and another $5 million in stock. The total price could hit as much as $70 million, should the enterprise hit preset goals. The acquisition doesn't include Lagasse's company, which includes his corporate office and restaurants.

So, why the deal? Remember back with me to late last year, when the Food Network decided to stop filming the show Emeril Live. Here you see an example of real platform. The EL show was fairly popular, got lots of people saying "Bam," and turned Lagasse into a very hot commodity. But while he would still have had the Essence of Emeril show, it was a low-key affair with no screaming audience members and, presumably, a lot less mojo. No inside info here - just what I've seen on the Food Network and from being a food fan.

But I'd argue that this makes business sense, and it shows you the Essence of Platform: screaming fans that want what you provide. Not expertise; the Food Network has been cutting out a growing number of the show hosts that were actually chefs. But when that driving force is taken away, the whole kit and kaboodle is suddenly a lot less desirable on its own.

However, MSLO has the television distribution and already deals with magazines, books, and products. This was a natural match, and a very smart one. Because while MS has platform, the company needs more than her as a brand, or it could literally live or die on her mortal existence. Suddenly they had an opportunity to snag another personal brand that was a compliment, and so they paid a good amount. When an editor talks to you about brand, understand that this is the type of grand notion he or she really wants. Having a blog alone won't do it. Earning a special degree or certification won't do it. Those are the barriers to entry to seem credible. Then you have to get people wanting you. If you can do that, the publishing world will look far more kindly on you than you thought was possible.

Now, if someone can only get Rachel Ray off the Wheat Thins cracker boxes.

Contract Review: Better Health & Living

Another contract came my way, so here's a review. As always, I'm not a lawyer and this isn't legal advice:

• Section 2 "Publisher retains the right to make any and all revisions and/or modifications as deemed necessary." However, will you ever get to see what appears with your name before it’s in print? You should have the right to see edits ahead of time and, if you find them egregiously bad, take your name off the piece.


• Section 3 Pay comes within 30 days of invoice, but also "after acceptance of the Work by Publisher in a publishable form satisfactory to Publisher (at Publisher’s sole discretion)." The publisher can decide that something isn’t suitable, even if you deliver what it asked for. There is also no time line for providing official acceptance.


• Section 4 "Publisher agrees to reimburse the Author for all pre-approved and documented expenses within fifteen (15) days of submission of the receipts to and the acceptance thereof by Publisher." This has become a personal irritant to me, because if you're getting reimbursed, then it shows up as income, and you need to deduct the expenses on your own taxes so you don't have to pay taxes on the expense reimbursement. That means you need the receipts. If they're willing to take duplicates of the receipts, that would be fine, but some publishers won't, and there's nothing about what is acceptable in this contract.


• Section 5 Although the section starts off about the copyright being the property of the writer, be wary, because you're being set up. In paragraph d, "The Work contains nothing libelous or otherwise unlawful, does not infringe any rights of other parties and does not contain any recipe, formula or instruction which if followed accurately would cause injury or damage." How about knowingly on at least the libel or rights infringement? Because ultimately it’s a court that decides whether something is or is not, not the writer. Graph f states, "All statements of fact in the Work are true and based upon deliberative research and all instruction and advice in the Work is harmless and not negligent or defective." Add "to the best of the writer’s knowledge," because you could make a legitimate mistake, but there are no provisions for honest mistakes here. Graph h provides the real zinger: "The Author agrees that all Work performed for and accepted by the Publisher has been written exclusively for the Publisher for distribution and circulation into various markets at the sole discretion and timing of the Publisher. Author further agrees not to reproduce or disseminate the Work in any fashion to any third party without the express written permission of the Publisher..." In other words, and the second sentence notes this, they want control even if they don’t own copyright. And unless it’s all rights, how can it be written “exclusively” for the publisher? It doesn't matter, because this is saying that you don't intend to sell it to anyone else, and that you'd need to get the written permission of this publisher to do so. It's an end run around using either "all rights" or "work made for hire" wording that might alert you.


• Section 6 I find the sentence "The Author should not consider the publication of their Work as certification by the Publisher" to be confusing. Does this refer to copyright registration? If not, then what?


• Section 7 "Although Author may be permitted to reuse all or portions of their Work under this Agreement in other works, this does not extend to granting third- party requests for reprinting, republishing or other types of commercial reuse. All such third-party requests received by Author must be forwarded to and handled by the Publisher, at the Publisher’s sole discretion." This whole thing reads as something sneaky to me. the author may be permitted, but doesn't have to be permitted. And this doesn't extend to third party requests for republishing, reprinting, or "other types of commercial reuse"? So effectively toss out even the "may," because if it's commercial use, you can't have it.


• Section 8 "Should either party to this Agreement be required to engage an attorney to enforce any provision herein, or bring an action for the breach hereof, then in addition to any damages or other relief recovered or obtained, the prevailing party shall also be entitled to recover reasonable attorney’s fees." That should not be granted ahead of time, but left to a court to decide.


• Section 9 "This Agreement shall be construed according to the laws of the State of Delaware, without regard to the choice of law provisions of that State, and all actions, regardless of the form or nature of such, to enforce this Agreement or for the breach of same shall be brought within one (1) year from the occurrence of the grounds for such action in Delaware." First, this is a problem because you're agreeing that you'll go to Delaware to bring an action, at least the way it reads to me. Second, someone can think there's a material breach of the contract, not say a thing, and the suddenly take legal action up to a year later? How about a chance to fix the breach? How about just getting rid of time periods?

Given the rights obfuscation and some of the other issues, unless this publication is paying a whole lot, I think a writer would be better with a whole different contract.

Book-A-Month Publisher

NPR's All Things Considered had a piece the other night on Jonathan Karp, former EIC at Random House and now publisher and EIC of Twelve, a publisher that produces one new book a month. His impetus was interesting:

"What I really wanted to do with this imprint was to make a promise to every writer we publish that we would do everything in our power to make his or her book a best seller," Karp explains.

In other words, he wanted to get out of the "legalized gambling" business model of publishing gazillions of books and hoping that some number of them would be a hit, and then get behind those.

A welcome relief? Perhaps. It's important for businesses to realize what they are doing and to make efforts to find "products" that will appeal to customers, and publishing is no different from any other industry. However, let's look a bit deeper. On one hand, their strategy is generally a "me too" approach, in which they all look about for what seems to be selling and then try jumping on that bandwagon. The mathematical result amplifies each accidental direction, making the entire industry lurch this way and that without more thoroughly thinking through what it is doing. It's the old problem, seen in strategic planning circles, of trying to plot company direction by looking at history. Knowing what has sold in the past has some value, but that only tells you where you've been. Real breakthroughs come from figuring out where you should go. When you look only at sales histories, you're driving forward while looking only in the rear-view mirror - an old analogy, but apt.

Will Twelve find a different approach? It's hard to say. Karp comes out of the established way of doing business, and his first two books in the new venture were both hits - and came from Christopher Buckley and Christopher Hitchens, both name authors. Yes, he can marshall resources behind one book instead of multiple ones, but I think that may push him in the direction of largely looking for editorial safe bets. A large publisher can have a surprise hit come out partly because of the industry's traditional model (which corporations have been turning in a detrimental direction, I think): the hits subsidize all the other books. When you have only 12 titles a year, you'd better be making a lot of good choices.

At the same time, Karp (hopefully) has avoided the biggest problem with corporate publishing: a priori profit goals that may not relate to what the business might organically support. The large companies that bought publishers decided that the roughly 5 percent profit margins were due to the business ineptitude of the families that once controlled the houses. Certainly some of the practices that came out of that era - the ability of sellers to return books six to even 12 months after they purchased them - make it difficult to predictably do business. But I suspect there is also something inherent in the nature of selling books that keeps them from being quite the cash cows CEOs would like to order.

On Wal-Mart Dropping 1,000 Magazine Titles

I think the story of Wal-Mart cutting a thousand magazine titles off its list is probably more complicated than it seems on the surface. Wal-Mart is driven by operational efficiency. Part of that means carrying products that really move. News stand sales are often the opposite of efficiency - think 70 to 85 percent or more being returned because no one buys them. Plus, the article talks about the list having magazines that hadn't existed in a significant period of time.

It sounds to me like they are purging lists of things they haven't/didn't want to carry for a while, even with some major titles being taken off. I'd also wonder if this is a step toward something else that would be pretty significant: taking control of their own magazine distribution, rather than doing the "usual" thing of allowing distributors to populate the shelves as they please.

Finally, dropping 1,000 magazines? That alone is a clue, to me, at least, that something is odd. I've been in some large Wal-Marts, and there's simply not enough shelf room to drop 1,000 magazines and have anything left. Maybe a lot of the titles were distributed regionally, or had been brought in and one time and then not a second. In fact, I just saw something from a publishing consultant (sorry, no free online link) that suggests a) the magazines left in Wal-Marts will easily account for over 95% of their sales, and b) the number of magazines actually on display at a Wal-Mart at any one time is closer to 300. Many of the cut titles are only sold in certain geographic areas or during particular times of the year. Finally, some of the magazines - like the Economist or the New Yorker - are aimed at a different demographic than Wal-Mart's customers.

So, when Wal-Mart trims magazine list, it's significant news for the publishing industry. But the real significance - taking more control over distribution - is yet to be seen.

CJR Column on Blogging

It's interesting to see how blogging has become part of the professional journalistic landscape. The Columbia Journalism Review has a piece this month on the economics of blogging. Anticipating that blogging could end up with its own guild like the WGA is probably unrealistic. After all, author Chris Mooney describes a group of freelance writers, and that means no "real" union. (Here's an earlier post where I describe how the WGA writers differ.)

Where he's right, though, is in understanding that publishers, whether print or online, cannot assume that they can reach significant audiences and reap the advertising economic benefits while continuing to assume that writers shouldn't be paid. Unfortunately, too many writers - not just the casual ones, but the professionals - have gone along with this nonsense, buying the arguments that the publishers "aren't making any money on this - it's the web, after all." Do you realize that traditional print magazine business models assume that publications run in the red for three years? Does that mean the writers, designers, and printers are all supposed to work for free? No, it's called an investment in the business by the publishers.

That's what web sites and blogs are: investments. Until writers start thinking like business people and stop thinking that they have to be grateful that someone allows them to provide value, they will continue to undercut themselves and all other writers.

Learning Everyday Business Analysis

A writer on an online forum recently noted in passing that Writers Digest seems to have shifted its editorial focus, targeting would-be writers rather than experienced working writers. There's a lot to learn from this observation, and much to be gleaned for the way that I think writing is moving.

Why WD would shift audience definition comes down to money. Compared the the number of people who think they would like to be writers, I suspect there is a relatively small pool of those actually in the business.

The publisher needs to make a lot of money to pay for articles, marketing, design, production, printing, and everything else that is part of publishing. The money has to come from a combination of advertising and subscriptions. Remembering the concept of different business models in the writing and publishing world, either you pay, the audience pays, or someone else pays. One aspect of third parties paying is that they must think they'll get more back in business or value than they money they pay to the publisher. In the case of a publication aimed at writers, I suspect the expectations are low, because we are, let's face it, such an incredibly cheap lot.

That means the money coming from readers - subscriptions and news stand sales - are going to be the big driver of revenue. There are two ways of getting this money: charging a small number of people a lot, or charging a lot of people relatively little. In other words, you have to balance real niche publishing (vehicles that address the interests of small audiences who badly want something) against mass market (getting less money per copy, but selling many).

To make niche publishing work, you'd have to charge a premium price and get the audience to pay. Think of it this way: you have a collection of four targeted articles in a month. Each runs 1500 words. If the articles' writers are going to get even $1 a word, that's $6000 in labor. A subscription base of 1000 would have to pay at least $6 a month, or $72 for a subscription, just to cover the writing labor, with no money for design, marketing and sales, and production. Roughly double that to cover other costs and leave some profit for the publisher, and consider whether the audience members will pay $140 or $150 a year. Are you providing something of such value that it becomes worth it to them? And are they the type of people who will recognize the value and appreciate it?

There are newsletters that get have these types of subscription fees, and some that charge much more. But I'm not sure writers are good candidates for being willing to pay that sort of premium. And so, the publications like WD fall back to the least common denominator, publishing articles for people who aren't in the business but wish they were. Get an audience of 20,000, and the money you need from an annual subscription of those four articles (at least distributed electronically) goes down to $7 or $7.50 - low enough that many people will take it on impulse.

I think this is an example of the types of calculations we're all going to have to start making. What is the audience for a particular piece of writing? What will they pay? How much does it cost to reach them? Quotidian business planning and analysis is as necessary as a firm grasp on grammar, and a darn sight more important than excellent spelling. You can always use a spell checker, but there's no such thing as a business checker.

A Note From the Music World

Debra Cash sent another great link - this time to an article by musician David Byrne (at one time in the Talking Heads). He analyzes the current music business and identifies six distinct business models that musicians can consider for their recorded music. It's not that a writer can make direct use of all this, but many of the issues are similar, and the important thing is to see an example of a creator looking at his or her markets with a sharp business eye.

His analysis makes makes me think that there are (at least) nine basic models for writers:

• Doing someone else's writing Whether ghosting or true corporate work, there is a class of writing in which you sell your skills, but not necessarily the writing you want to do. You might get credit, or not. You might get royalties, or not. In general, you should charge more, because you're not getting much of anything else out of this. (Note that charging can include royalties, in something like a book deal.)


• Sell all rights for a fixed fee The positive part is that, if you are getting an economically reasonable amount of money, you avoid having to do the resales and don't have to wait for months or years to collect additional money. Unfortunately, writers often settle for sums that don't approach the potential value of the work, and they also give up all control over the writing going forward.


• Sell all rights for a combination of fixed fee and royalty In this case, you get an ongoing payment stream while, presumably, not having to sell. That can be good if the company obtaining the rights is good at what it does, and bad if they couldn't sell a blanket to a shivering person. Also, you still lose control over the writing.


• License all non-exclusive rights You don't get as much up-front (presumably), but you also don't completely lock yourself out of doing something else with the writing. It means little if you don't consider what else you might do with your intellectual property.


• Judiciously sublicense rights License a sm