Myth of the Long Tail?

A study in the Harvard Business Review looked at some data in the light of Chris Anderson's "long tail" theory and concluded that while the tail is getting a bit thicker, the head - the "popular stuff" - is really what is growing. Or in the words of that great business philosopher, Ira Gershwin, "Them that's got shall get, them that's not shall lose. So the Bible says, and it still is news." I've written about this on BNET (the new business arm of CNET), and that has links to the study as well as to Anderson's reply (which I found essentially unsatisfactory).

But enough of them; let's talk about us. Does the long tail hold any hope for individual writers? Yes and no. The upside is that if you have some writing that will interest a large enough community, and you market hard, then you can make money. You can, that is, if you put in the work and don't sit passively, assuming that the long tail is going to bring your income to you.

I get the sense that many writers look to the long tail concept as a silver bullet that will bring money in without them having to do anything else. Nothing could be farther from the truth. Say that an Amazon sees 20 percent of its 2007 sales of about $14.8 billion in the long tail (though the study would suggest more like 10 percent). According to Anderson, the tail should be everything that you wouldn't find in a Borders or Barnes & Nobel physical location. That means every one of the estimate million book SKUs the 10 or 20 thousand you might find in a store. So be generous and call the remainder 9.8 million. Divide and you get ... $285 per year per SKU.

Even if there is an average of 2 SKUs per book (each SKU representing a specific version of the book you could buy), that's annual revenue of $570 from Amazon. Even if that is only part of what you get (and remember, physical book outlets won't even have your title, by definition of tail), what are you going to make total? Maybe $1100, and that's in total sales. The cut going back to the publisher is half, so you're back to your royalties on $570 a year, or maybe $60. Self-publish and you could get the number higher, but that's hardly the passive approach to the long tail.

The only hope the "long tail" offers the individual author is the old concept of niche audiences, marketing to them, and making money. Nothing new there, and nothing easy. In fact, I'd argue that the only writer who is really making money off the long tail is Anderson himself.

Time to Debut Magazine Mix and Match

Time is finally going to launch Maghound.com, which, as Folio describes, is its "Netflix-like" service:

Maghound.com allows consumers to choose titles from a variety of publishers for a mix-and-match “subscriptions” where they pay one monthly fee and have the ability to switch titles at any time. Unlike traditional subscriptions, members aren’t locked in their memberships and can cancel whenever they wish. [President of Maghound Enterprises Dave] Ventresca says that Maghound.com offers “flexibility, choice, control and personalization.”

I think this has to be a relatively scary thing for publishers to get into. Until now, people I know would make a calculation regarding a magazine subscription: If you were going to spend more on individual issues than you would on the best discounted price you could find for a subscription, you went for the subscription.

The fear? That model pushes people into getting more subscriptions than they may want. Publishers like subscriptions, because they help guarantee that much more paid circulation, and that means being able to charge advertisers more.

But with Maghound, people can swap subscriptions at any time, and it doesn't seem to cost too much more than the "$12 for 12 months" approach, except you don't get locked in. So I'm betting there are going to be magazines that start to see their subscriptions numbers slip. That will translate into even more uncertainty at publications, which could drive even loonier and more desperate attempts to "attract" readers - a scary thought, because it usually involves some complex wishful thinking and not coming up with something that you know people want, even if they don't know that they want it. That would translate into stranger assignments and more hoop-jumping. You can bet I'll go to the site to sign up - and to see which magazines I might think of avoiding.

What's Black and White and Red All Over: the Newspaper Industry

Here's a link to a New York Times story about how the newspaper industry is going "from bad to worse" with double-digit ad revenue plummets:

On top of long-term changes in the industry, the weak economy is also hurting ad sales, especially in Florida and California, where the severe contraction of the housing markets has cut deeply into real estate ads. Executives at the Hearst Corporation say that one of their biggest papers, The San Francisco Chronicle, is losing $1 million a week.

Over all, ad revenue fell almost 8 percent last year. This year, it is running about 12 percent below that dismal performance, and company reports issued last week suggested a 14 percent to 15 percent decline in May.

If you're still writing for newspapers as anything more than a hobby or outlet of self-satisfaction, it's time to rethink your business model - quickly.

Outlasting the Amateur Onslaught

Though a chain of links (Google pointing to a photographer in the Phillipines who noted a post on Digital Photography review), I came across the following online discussion among a group of photographers. It's worth reading, because it shows that writers are not the only ones facing the market onslaught of "amateurs." I'm not making claims about who shoudl be considered amateurs or not, nor do I know that this discussion was representative of pro shooters. But through page after page, you will see complaints that strike a resonant chord:

• Amateurs give away their work.


• Amateurs have "regular" jobs that let them give away their work.


• Publishers trying to reduce their operating expenses turn away from pros.


• Photographers are seeing rates plummet, at least in the lower and mid-tier markets.


• Many photographers are frustrated and don't know what to do.

One of the interesting posts came from a self-described amateur photographer:

I'm one the amateurs you describe and I'm surely not gonna give up just because of a rant of an unsuccessful pro.

I earn my living elsewhere, can afford professional equipment, can take pictures that get published, and enjoy doing it. It's not about what you studied or whether you decide to describe yourself as a "pro" - it's about the photos and about contacts with people.

> They will work for discount / free or the honour of having their work
> published.

Yes, that's me. Face it or go play somewhere else.

There is a lot of smart observation in that remark. Complaining won't make the problem go away, and complacency will wind up in your professional diminution and possible financial ruin. You need to find ways to accomplish a few objectives:

1. Know that value delivered begets success. People do business with service providers because they are trying to gain some value from the exchange of money for work. If you cannot deliver quality - that is, what the customer expects in the way the customer expects it - then you cannot succeed. Business is a series of exchanges in things valued, and you can only do well if you have something with perceived value.
   
2. Improve your quality. I know many writers take umbrage when I or others have suggested that quality was the root of success. I certainly don't hold myself out as the be-all and end-all of writing. I'm constantly trying to improve my craft, my reporting, and my business practices. But over the years, that effort has turned into more extensive word-of-mouth among clients and prospects, better clips, and greater ease in delivering what clients are really looking for. Everyone - but everyone - can get better, and if you find that the concept stings, you should take a cold, hard look at how you write and how you run your business. I've never known a person who was successful beyond luck or birth to operate in any other way.


3. Improve your markets. Amateurs have a difficult if not virtually impossible time in cracking top markets - or in staying there - because they don't have the abilities, experience, and willingness to deliver consistently what those markets require. Conversely, amateurs will gravitate toward lower-end markets because there are lower barriers to entry. In short, the bottom feeding clients want something for nothing, and they see writing as a commodity. You should drop such customers because they keep you from moving forward and destroy a sense of satisfaction in the work.

Complaining will do nothing, and nothing will change the course of markets. However, you can find ways to move against the tide and differentiate yourself from the crowd.

What Your Hourly Rate Isn't

Many writers misuse hourly rates and, as a result, end up damaging the smooth and profitable operation of their businesses. Here are points to check when you consider what you make per hour:

• Double-check your calculation of a minimum hourly rate. I've seen writers assume that they will bill a much higher percentage of their time than is realistic. Calculating a minimum hourly charge involves tallying all the money you need to make for a given time period, say a year, and then dividing it by the billable hours for that period. Most consultants and freelance businesspeople will do reasonably well if they can charge for half of their time. However, I've seen writers assuming that they would be able to charge for 70 percent or more. That is great if it can happen, but it's a terrible idea to assume it will. The higher your number of billable hours, the less money you have to make per hour to hit your financial goals. The problem comes when you find that you don't bill that many hours but have been charging as though you would. Suddenly you wind up with less money than you need. Do yourself a favor and figure that at best only half of your time is billable.


• Don't focus on the hour and forget to look at the bigger picture. If you want a sobering number, take all the money you actually make, not need to make, for a year and then divide that by the total number of working hours, not just the amount you can bill, in that year. Taking two weeks vacation, holidays, weekends, sick time/personal days out of the picture, but leaving in marketing and administration time, that should leave you with 1,840 hours. So divide a year of income by 1,840 to find out what you actually made per hour for a typical 40 hour work week. Here's a hint: if you grossed $100,000, that would be just over $54 per hour. If you're grossing $40,000, that would be under $22 per hour. When you think you're satisfied because you made $100 per hour on a given job, remember the big picture. You have to aim higher in revenue because you have to pay yourself for all those unbilled hours.


• Remember to aim high. The previous couple of calculations should suggest that it is all too common for writers not to be charging enough. Remember that when setting your pricing. If your current clients pay far lower than you need to make per hour, it is time to find some new ones.


• There is a fallacy of "market" hourly rates. There are too many variations on markets to come up with a number that is really representational; rates will vary by company size, industry, type of writing, needed expertise, and so on. You might ask another writer what he or she makes for a certain type of work, but is that what you can make? Do you offer enough value to match that number? Or is the writer charging too little, and will you leave yourself in someone else's economic hole? Focus on what you need to make as well as the value you can bring, because you can't get away with charging more than what clients perceive you to be worth.

New Magazine Launches - Up and Down at the Same Time

Samir Husni, "Mr. Magazine" and chair of the journalism department of the University of Mississippi, watches the magazine market closely. In a relatively recent blog post, he noted that new magazines starts in the first quarter of 2008 were five titles more than the same period in 2007, but only 41 came out with the intention of at least 4-times-a-year publishing, versus 50 in 2007 and 72 in 2006:

So what does this mixed bag of numbers mean? Not much. Since I have started tracking new magazine launches, I have witnessed a two or three years’ declines after a very healthy and busy year. 2005 was a very healthy year. 1013 new magazines were launched. The decline started in 2006. We are in our third year of decline. In 2006 we have seen 901 new launches, the number dropped to 715 last year, and if the trend of the previous years continues, we will see another drop again this year before the numbers bounce back. Call it market correction if you please, but definitely it is NOT a sign that print is on its way out. History will tell us otherwise. So enjoy this quarter’s crop and look forward to more titles to come next month.

I must agree and disagree. On one hand, no, magazines aren't going to disappear overnight. However, even counting downward economic pressure, this is hardly something to make you feel comfortable. You have to find where the magazines are still strong and forget about any old mainstay that is being hit badly.

Daring to be Wrong

I have often seen writers asking the most basic questions, even when they've been in freelance writing for a while. I don't mean fundamental questions, like what are some principles that can help me find my direction. I mean basic, such as do I mention that a mutual acquaintance the editor and I have suggested I pitch, or am I allowed to call an editor?

Although I do believe in the adage that no question is too foolish to ask, I think we all have to temper that with another: if you're going to ask a question, understand why you do. The answer for many writers, including a number who have many years of experience under the belt, is that they ask questions because they're afraid of making even the slightest mistake. That in itself is close to the biggest error you could conceive.

There is no way you can ever come close to complete certainty. As in any activity, you cannot just read how to do it. The only way to learn is to try and to make mistakes. There will be times you say or do the wrong thing. Don't worry so much. So long as you're not doing something like making up a story or delivering excremental effort to a client or insulting people, you're not going to do irreparable harm to your business.

It's as though people want a set of rules and checklists to follow that will guarantee success. But the more specific the prescriptions, the less flexible they can be and the more certainly you will settle on something that cannot work all the time. In other words, the more you try to get the complete and exact list of steps you need to succeed in business, the more you set yourself up for failure.

The important thing is to learn the underlying principles, not their specific applications in all circumstances, because what will work for you will not necessarily work for me. Just try to practice the following:

• Put your client's interests before your own.


• Do your best and then keep trying to surpass it.


• Remember what you need out of your business and don't dishonor it.


• Acknowledge all the help and luck you have had and do what you can for others.


• Say no to the unethical and odious.


• The business is about relationships, not about words.


• The sooner you make the first 5,000 mistakes, the sooner you can learn and improve.

Anyone who can't deal with your being mortal and human is probably not someone you'd want to do business with anyway.

More on HarperCollins Move Away from Advances

Last week I mentioned that a new division of HarperCollins was looking to move to profit-sharing rather than book advances and to change the crippling practice of liberal return policies for bookstores. I've read some additional reporting by Jeffrey Trachtenberg in the Wall Street Journal (requires paid subscription):

To be headed by veteran publishing executive Robert S. Miller, the imprint also likely won't pay for more desirable display space in the front of bookstores, a common practice. Instead, the as-yet-unnamed unit will share its profit with writers and focus much of its sales efforts on the Internet, where a growing portion of book sales are shifting.

There's been some discussion in the writing community about whether the huge advances to a few end up causing the problem - and they may trigger it. But most publishers try to gauge advances by expected sales in the first year or two and the attending royalty payments to authors. If a book doesn't earn out its advance - and most don't - then perhaps it's not even selling enough to pay for the advance. Assuming that, then is splitting profits going to be better for authors? ON reflection, I just don't see it. This is part of a cost-savings measure designed to lower risk, so why would the publisher do this if it were going to pay out more money on the average? I suspect that most authors would end up with even less than usual under the arrangement.

Now consider that the publisher is going to focus on Internet sales, and not sales from stores. Oh? As in, let's depend on all our sales from Amazon, B&N, and Borders online? Sure, it's an important channel, but, alone, not enough. Amd then they'd also be changing the return policy to those resellers as well, so figure that they might have the same reluctance to do business that way.

Trachtenberg also points out that Harcourt Brace Jovanovich tried eliminating returns in 1980, offering higher discounts instead: "Orders fell off, however, and the publisher reversed itself." Then again, he notes that B&N CEO Steve Riggio said several years ago that he'd rather be able to mark down books than return them - whatever that means. Retaiers in other industries do that, like clothing, but they also get much higher discounts on products and, so, have more room to discount without an absolute loss.

All this will depend on the economic market in the book industry, and where that comes out isn't completely clear, even though the Journal article tried to paint an overall negative picture. On one hand, Borders has put itself up for sale, and the WSJ noted that Hyperion's operating income (pre-tax profits) is down a bit. B&N saw a 9 percent drop in its earnings in its fourth quarter in comparison with the previous year, but that's only half the story, as it earned more and paid out more dividends to investors than analysts expected and also said that its first quarter this year would be profitable, rather than the loss that analysts had predicted. Then again, many on Wall Street are ambivalent on Amazon. In short, there is too much going on that could be written off to a shaky general economy, I think, to get resellers to embrace big change in the way they operate, which means that the new Hyperion group could find that sales will be largely limited to the Internet. In short, even if dropping an open return policy could cut by 30 to 40 percent the number of book copies they have to print, I'm betting that the overall hit on sales would more than make up for that, meaning that the prospects for authors just don't seem that hot.

Steady Clients: Passion or Passivity?

I had a couple of recent experiences that got me thinking about the nature of long-term clients and customer satisfaction. In one case, I had thanked a writer who had referred me to a client and got a pleasant note about the feedback being strongly positive and saying that it was likely we'd be working on the next project together. ON the other hand, I found myself on the other side of the writer/client relationship, being highly displeased with one writer, as I was editing a feature package for a magazine, and saying that I'd never work with the person again. When I talked to my editor, the real client, she said, "You know, you've inspired me. I've been putting up with that writer for a long time, but maybe I just won't use the person again."

Most people in business assume that a steady client is a good client. From some views, that is absolutely correct: you lower your cost of acquiring a new customer while increasing the customer's lifetime value, or the amount of money the entity spends with you over the span the two of you do business. In short, the more money you make over time from a customer, the more efficient your marketing becomes, the more time and resources you can invest in building the future of your business, and the greater return on your previous marketing time and money investment.

Not all steady customers are the same:

• Some like doing business with you. They will seek you out, at least for the types of work they perceive you as doing well.



• Another group does business out of convenience. They have experience with you, so you become the devil they know, rather than the one they don't. That's not to say that all clients in this category consider you a devil, but we all have our weaknesses. On the balance, they find that doing business with you is a reasonably move on their parts.



• Third comes clients that work with you out of habit or inertia. They may not particularly like your work, business model, or style, but it's not enough to drive them off immediately.



• Fourth is the captured group that does business with you because they feel that they have no other choice, but they are actively interested in finding a replacement.

As you go from top to bottom, the clients may still be steady, for now, but they are increasingly likely to find another writer as soon as is convenient. That means there are different levels of vulnerability in your business even when you think some of your income is from tried and true sources.

I know we'd all like to think that all of our clients love us, but it's simply untrue. Look back over your career with some honesty, and you'll remember companies that flushed you out, or that took some work but didn't seem overly interested in having you do anything additional. There may have been some companies that kept a relationship only to get through a project - they were captive at the time - and beat a hasty retreat at the first possible moment.

Looking at your clients this way isn't to enter the land of blame, but of assessment. It may be that you and a client were or are simply incompatible, and that further business would run counter to either of your interests. The client might have been so unrealistic that a reasonable business effort would never have sufficed, and that there would never be enough forthcoming compensation to justify the exertion. Or it could be that you need to improve something - writing, business practices, areas of knowledge, or so on.

It generally takes time to know yourself well enough to begin making these judgment calls. I remember many, many years ago screwing up royally on some work and trying to blame the other party, but in my heart I knew that I was at fault. In a case like that, all you can do is work like hell to get good at what you do. Over time, the better you are, the more business starts coming your way, and the more you are able to command in the market. If you can get better faster, more power to you. If you're behind, why not work at getting better? Over time you might be able to increase a client's enthusiasm, and the chance that it will be around tomorrow.

Newspapers Fold Sections, Drop Coverage

It should be no surprise to anyone reading this blog that newspapers are facing problems. Ads are down, and when the money dwindles, so do assignments. But what we're seeing now is the canibalization phase, like when a runner hits the wall in a marathon. For miles, the athlete's body runs off the glycogen stored in the muscles - a carbohydrate that is like starch in a plant. It's the fuel for short-term use. But after such an effort, most people go through that storage. When that happens, the body starts to burn fat.

Newspapers went through their glycogen a long time ago, with huge profits that would make pharmaceutical companies envious. Then came the fat. Now we're down to burning muscle and bone. Look at the signs:

• Late last month, the Boston Globe sent a note to advertisers saying that Living/Arts will get combined with Sidekick and Food, depending on the day (with weather moving there as well). Business&Money gets mashed in with Careers. In other words, they don't have the ads to support all the pages.


• The Village Voice recently fired 40-year dance critic veteran Deborah Jowitt for economic reasons, along with film critic Nathan Lee. As the New York Times story noted, "Lichtenstein, a spokeswoman for the paper, said in an e-mail message: 'Financial constraints force us to convert two full-time positions to freelance jobs. Both Deborah Jowitt and Nathan Lee have been asked to continue writing for The Voice.'"


• As the Times notes in a separate story, movie critics are also on their way out - "laid off, reassigned or bought out in the past few years" - at a dozen dailies.


• If things weren't bad enough with ads, newsprint prices are risingas the Wall Street Journal notes. "The drop in supply has pushed prices up $60 from their October 2007 low to $620 per metric ton, raising yet another hurdle for newspaper publishers already grappling with declining circulation and advertising revenue." Paper manufacturers, long beneficiaries of their association with newspapers, are trying to keep their profits up for now, because they know it's only a matter of time until they're in major trouble.

Folks, if you are among the ones still writing for newspapers, now is the time to stop. For all the money they still make - because the profit margins are still in the low double digits - it's not enough for the corporations that bought them originally expecting much higher amounts. These are markets going away that will never return. At least, not in our lifetimes.

I understand the sense of professional grief that can arise in writers, but you have to get over that quickly if you're making your income from newspapers. They aren't going to last. You need to find other ways of making a living now. It might be magazines, at least for a few years longer. It might be corporate. Or have you considered working with others in your area, maybe putting together a review site for local activities, maybe with some of the other writers getting squeezed out, and eventually looking for ad money to support it?

It's painful to think that you must give up what you love. But the end is coming, and you have to think about yourself on a very practical level. If you're not eating, you won't be writing for long.

Whatever course seems good to you, if you've been putting off walking away from newspapers, what you're seeing is the bow of the ship dipping beneath the waves. There are lifeboats to the side, but for them to do you any good, you have to walk over and climb in.

Watching the Writing Markets During a Recession

I've written about some ways to try and anticipate some of the market problems that might come up during a recession, but it's also worth examining what some experts see for the next year or two. MediaDailyNews has an interesting article on what recessionary impact might be on various types of media distribution. Some of the conclusions are obvious, and some are surprising.

Traditional media gets hurt

There's something you could have predicted easily. The credit markets are down as is consumer confidence, and there are "lower sales in the automotive, technology, and packaged goods categories." That means pressure on ads and ad agencies - and the places that the ads run:

TV and consumer magazines should be able to hang tough, say industry observers--but it's not a pretty picture for radio and newspapers.

TV limps along

There might be a little loss of ads on television, but not overwhelming. Not like most freelance writers get directly affected by that.

Magazines are a mixed bag

Samir "Mr. Magazine" Husni, chair of the University of Mississippi journalism department, and one of the leading experts on the magazine market, thinks that successful titles targeting luxury markets will probably be fine. (UPDATE: I added the successful with the intent of noting that some luxury market magazines simply won't make it. And here's a blog post at the Wall Street Journal making the same point.) Mass market magazines will see a drop in ads and might well increase news stand prices - meaning a 6 to 12 month slump in news stand sales, which, I'll note, can affect how much advertisers are willing to pay. So, expect many titles to get thinner or push shorter article lengths. However, in an interesting twist, Hasni expects new titles to launch. Surprised? Apparently Fortune, Esquire, and Entertainment Weekly all launched during recessions. It's easier for new publications - if they have the funding, I'd think - to compete with established titles. Then when the market improves, the new magazines float upward as well. But I would emphasize my well-funded addition. If ad markets are soft, it's much harder to bootstrap to success. Be sure that new titles are from well-heeled companies.

Newspapers in pain

They were having trouble before, and the recession is just going to make it worse. I'm already hearing stories from some writers who are finding that their newspaper clients are reducing freelance budgets and even asking the writers to reduce their fees. This will only get worse with the ascendancy of Internet publishing and ads. If you've been doing work for newspapers, now is really the time to reconsider your business model and see whether there might not be a better way for you to go.

Radio markets sound bad

The market for freelance writing on radio is pretty poor normally, so as radio stations take a downturn along with papers (though maybe not as extreme), it's going to get worse. Funding for NPR is tighter as well. I'd classify this as a "

Online

Analysts figure that the Internet is going to scream along even more strongly during a recession. According to Jupiter Media, so says an Ad Age story, alternative media spending has jumped 22 percent over last year. The analyst firm is forecasting another 20 percent jump by next year. Part of that is because advertisers have less confidence in traditional media - and part of that is because marketers cannot easily show how effective particular outlets or campaigns are. However, what the heck does alternative markets mean? That gets tricky: interactive marketing; banner ads; behavioral targeting (following someone's activities on the web); and even branded entertainment, which includes "event sponsorship and marketing, paid product placement, advergaming and webisodes." As MediaDailyNews notes, it's unclear exactly where any of that money will end up - and so, it's unclear how much will translate into sponsoring content that needs writing. Much of it goes into search advertising, and that only drives content indirectly. But it's important, and even people doing straight editorial online need to understand the basics of search engine optimization as it applies to writing. That means a lot more than "stuff in as much keywords as you can."

Cry Me A River: Musician Billy Bragg on the Internet Underwriting Creatives Provide

A reader, catching up on her reading, forwarded a link to a New York Times piece called The Royalty Scam. In it, English songwriter and author Billy Bragg eloquently wrote about the inherent problem occurring on the Internet. In mentioning a conversation with the founder of Bebo.com - a social networking site that just sold to AOL for $850 million - he wrote the following:

In our discussions, we largely ignored the elephant in the room: the issue of whether he ought to consider paying some kind of royalties to the artists. After all, wasn’t he using their music to draw members — and advertising — to his business? Social-networking sites like Bebo argue that they have no money to distribute — their value is their membership. Well, last week Michael Birch realized the value of his membership. I’m sure he’ll be rewarding those technicians and accountants who helped him achieve this success. Perhaps he should also consider the contribution of his artists.

I agree with Mr. Bragg that there is a significant problem for creatives of all stripes. Also, anyone who's been reading my posts for any period of time knows that I'm not a fan of giving work away, whether for "exposure" or not. (Bragg points out that he gets exposure from radio stations; the difference is that they pay for the use of his music.)

However, the Internet issue is also a thorny one because of "monetization." Companies that own sites must find ways to make money not just from their sales, but from their operations. This is a situation that has many CEOs biting their nails late into the night. On one hand, they pay a whopping amount to acquire the social media sites because they're sure that if they don't, their companies will be left behind. But on the other hand, they can't figure out how to make money online.

I don't mean to point this out by way of excusing the system, but rather as a form of explanation. Many of the now hot Internet sites depended on investors for enough money to operate. When they sell, the investors get the money, and there are still those jobs that were created. But the real elephant in the room is that making money is far more difficult than any of the Internet cheerleaders want to admit.

So, do you give a cut to the musicians, particularly "the fledgling songwriters and musicians posting original material onto the Web tonight" whose "first legal agreement that they enter into as artists will occur when they click to accept the terms and conditions of the site that will host their music"? It would seem fair, but how do you calculate it? What is the value compared to, say, the amalgamation of posts and profiles that draw people to sites?

I don't have an easy answer. If I did, I'd be making a whole lot of money from knowing it. The one thing that is clear is that the start-ups, even as they get big, don't have the cash resources to pay everyone, and the corporations that buy them do so assuming that the business model of free content is going to remain. Otherwise, they would need to see enough cash to pay people.

We can draw a lesson. Your work may be wanted on the Web, but you can't depend on others to make a living for you. You must do that yourself. If you're going to use a site to promote yourself, either be comfortable with the thought that you'll never see a dime, or start developing business models now that will let you make money. Perhaps you need a link to an online store. Maybe you need people to come to your own ad-supported site. But certainly you cannot depend on others to make your business work for you. That is your job.

Taking Low-Paying Work

In response to my post about tips for writers during fears of a recession, a reader responded with the following:

Your latest email is great. I think there’s a #10 issue to address: whether to take on work that pays less than your normal rate because some money coming in is better than none. This is an issue that we go around and around about online, I know, but it’s a very real one, especially in this economic climate. Yes, taking lower-paying work will take time away from my marketing for better gigs, but I need to pay the mortgage, too. I know I’ve seen you opposed to doing this, in general, but you might want to revisit the issue and examine it from both sides.

Happy to oblige. What I oppose is taking low-paying work when that becomes a reflex action to any business difficulty. The problem is that you set yourself up in a few ways:

• You generally have to work more with low-paying work to make a living, which means that you end up cutting down your marketing time and reducing the chance of getting something that pays reasonably.


• Often writers point to an effective per-hour rate that seems reasonable. That may be true for the off-piece, but those who do significant amounts of such work don't generally seem to do that well overall. That's because you still have to spend time getting the work in and managing the flow. Now your marketing needs increase, because an increased set of assignments means you must bring them in. So you're cutting down on the time available for that lower-paying work and putting a ceiling on what you can earn.


• It should take about the same amount of time to do a competent job on a given length assignment; it's independent of the pay. To decrease the time and increase the hourly rate, you cut corners. Read the writers' boards and you'll see how many people complain about having the do the extra interviews, concept planning, rewrites, etc. That means, to some extent, you must do less than your best, and certainly less than would be required with a higher-paying and more demanding client. You end up turning the writing into factory work. Those who want the commodity writing excuse their lower pay by lowering their expectations. However, if you do this all the time, you end up with a lot of work samples that, to a more discerning client, will speak of such factory work. To put it bluntly, when you skimp, you make yourself appear like a hack to the clients you really want to attract, who then are less likely to use you and you do more of the low-end work. It's like the old concept of company-provided housing and a company-owned store; you never get to make enough to get out from under.

All that said, the reader who emailed me is right. There may be times to take lower-paying work. If you have to send off the mortgage or rent, you need money to do that. But given the above discussion, I think there are a few principles to follow when taking lower rate work:

1. Don't discount. You want to preserve the ability to charge more, because that makes a living easier to get. So don't drop your rate with regular clients in a hope to attract more work. If they are regular clients, then they know what you're capable of doing. If you start taking less, you will continue to take less, because you've said through your action that what you do is actually worth less.


2. Limit the exposure. Treat lower-paying work as something literally to make your nut. Keep marketing fiercely to make it as unnecessary as possible. Continue focusing on getting better-paying work.


3. Balance the value equation. As I teach in my various classes, business is a value equation. You provide value and expect value in return. I don't believe in cutting corners. If you get paid less, still treat the assignment as seriously as you would any. But try to balance the equation to get enough value back in one form or other. Low paying assignments will have to turn around cash quickly enough, be limited in the rights they get, or possibly sit on research you've already done. If you can't make it a naturally more acceptable assignment, then you should pass on it.


4. Incorporate it into your business model. Low-paying work can be a distraction when you just react to it. So don't. Make the lower paying work part of your business model, even if only while economic times seem tough. Have a strategy for it, set boundaries for how you deal with such work, and stick to them. That way you reduce the possibility of losing a grip on your higher-paying "real" work, and increase the chance that the two work streams will harmoniously co-exist.


5. Don't buy someone else's PR. Economic downturns are funny things. They don't affect everyone and everything evenly. Don't go into lower paying work from a panic. Instead, watch how things are going in your usual work. Are you sure that any problem isn't a result of your letting up on your usual marketing? (That can happen too easily to any of us.) Try doubling up on marketing first, unless you're in a cash crisis and the turnaround on such efforts will take longer than you have.


6. Don't buy someone's negotiating tactic. Sad as it is from a view of humanity, there are people who will try to use a recession as an excuse to reduce what they pay, even though they don't have to. But it's not as though you can find a way to work more cheaply as manufacturers often do. Maybe you can to some degree, but be wary of any client who tries to strong arm you into what is unwise for your business. Another way of putting it is that there are poorly-paying clients, and then there are cheap clients. The latter are generally ones to avoid, because they're not providing value in other ways. They just want something for nothing.


7. Don't panic. Douglas Adams had it right in the Hitcherhiker's Guide to the Galaxy. The biggest mistake you can make is to freak out. Take a deep breath and consider all your options in dealing with an economic crisis. Some of those might include borrowing money, negotiating with creditors to spread out payments, or reduce expenditures. The more creative you can be on money, the more space you can make for smarter business decisions.

It may be that a recession will force you to consider lower-paying lines of work, and that can be part of life. But if you have to go there, do it with your eyes open.

Nine Tips for Writers During Recession Fears

What kills business isn't a recession so much as the fear of one. I don't just mean the overall economic effect, but the paralysis that can happen when you own a business and start thinking that you are the plaything of inevitability. You aren't. Here are nine tips you can use to strengthen your approach to doing business during a recession:

1. Market more - a lot more.


2. Don't be picky about topics. You can focus on the "but I *love* to write about XYZ" when you can afford to.


3. Look not just at the clients (and advertisers), but the industries. For example, the legal industry is often considered to be virtually recession proof, because companies need lawyers to do the deals when things are good, and bankruptcies/restructuring debt when things are bad.


4. Read trade press and talk to other writers to see if a given publication shows any of the signs of financial trouble. Ziff Davis just went into bankruptcy, but the signs were there for a while - one reason I didn't try to get work out of them.


5. Look for signs of trouble in your own clients. If checks start taking longer to get to you, start looking for other people to work for.


6. If you have a knowledge/experience niche that gives you a strong in with certain types of stories, strengthen it. If you don't, develop a niche. And keep adding niches as you can.


7. Don't put all your eggs in one client type basket. If you cover a topic for consumer pubs, see if there are things you can do for trade pubs as well, and vice versa.


8. Don't end up using a recession as an excuse: "I can't do any better because of the economy." When most everyone is marching in one direction, go in the other to find opportunities.


9. Look for companies that are more likely to keep producing written materials. An association magazine is one of the better examples, because if they're not sending something out to the members, it's probably because they're out of business. A custom publisher is a lesser example, because when companies feel the pinch, the custom publishing projects may be some of the first things to go, unless not having the publication is unthinkable for their businesses.

If it makes you feel any better, during the last major recession, right after the dot com bubble, there were writers who didn't see big drops in their income. Keep working away and, even if things aren't pretty, you can weather the storm.

Update

A reader emailed, asking me to address the issue of taking lower-paying writing to fill in cash needs. Here's my take on it.

Newspaper Publisher Facing Interesting Economic Times

Media General, claims to own more daily newspapers in the Southeast than any other company, is facing some potential economic shake-up. According to AP, the company is going to meet with a hedge fund that wants to nominate directors to the company's board:

Last week, [hedge fund Harbinger Capital Partners] said it is nominating a slate of candidates for the company's board because Media General "has lost strategic, operational and geographic focus in recent years," according to a filing with the U.S. Securities and Exchange Commission.

When a hedge fund wants to place directors on a board, it's generally because it doesn't see enough short term profits from the company, which could turn into return on its investment. The changes the directors might push for could run from smarter strategic directions to cost cutting and even selling off properties.

Media General owns The Tampa Tribune; the Richmond Times-Dispatch; the Winston-Salem Journal; 22 daily community newspapers in Virginia, North Carolina, Florida, Alabama and South Carolina; and more than 100 weekly newspapers and other publications. If you are writing for a Media General paper, then I think it would be prudent to assume that there will be continued belt tightening, incluidng smaller freelance budgets and all the joys that brings to people like us.

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.

It Can Happen To You

I recently had a book project get canceled in the middle. Although I had proposed the basic idea, the publisher wanted something near to it but different (like the difference between Manhattan and Trenton - at least they're both in the Northeast). The head of this imprint had decided to fit the book in with a new concept she tried in another book. And then the initial sales results came in: that book did terribly and she decided to can this project, assuming that it would have as many fiscal problems.

There was a clause in my contract that let the company cancel the contract should it decide that the book wouldn't sell in advance of its actually coming out and selling, and my legal remedies were limited to getting the parts of the advance that had come due. And I singed it, because the chance of losing the project was low, and even if it occurred, the advanced owed me would reasonably cover the blow. And, to be fair, my editor let me know, but said that I wouldn't be asked to pay anything back. I now have to look around for some replacement work, but it's only inconvenient, not a disaster.

I went into this with my eyes open, and only agreed because I had inherently limited any damages. That's because I've been around the block enough in life to know that any given unexpected event may be unlikely, but when you add all the things that can go wrong, chances are that something will. Many writers go into projects holding their noses at some unpleasant clause in a contract, but tell themselves that the situation can't happen. But of course it can. Look at all the news you've heard about the sub prime credit meltdown. Sophisticated and highly-paid managers at prestigious financial institutions told themselves that they were getting their organizations into easy money. After all, what could go wrong? Oops.

If you see a clause in a contract that makes you uncomfortable, be realistic about how safe you might be. If you're writing an essay about how you did something foolish and embarrassed yourself and don't mention anyone or anything else, then, sure, you aren't going to have a problem with libel. But if you tell yourself that you're only writing a small article and that who would take offense at something you said, then you are out of making a realistic analysis and into the realm of rationalization. You've crossed the line and aren't thinking, but coming up with ways to excuse your behavior to yourself.

You can't eliminate all risk from doing business. Risk is an inherent part of business, because it is the risk that also offers the opportunity. But do avoid foolish risks, and make sure that for the ones you take, you've got enough protection to keep yourself from taking an unexpected bath.

Finding Balance

Writers often find themselves either feeling strung-out over lack of work or drowning and not having the time they'd like for other things - the stereotypical feast or famine situation. Someone on a discussion board asked if it was possible to find a balance between work and live, and I think it is, although running your own business generally requires more hours than punching a clock.

Part of the answer is to realize that there will be an ebb and flow. There are times I'm flat out with work and can't do anything else. Then there are times I goof off, hang out with my family, cook dinner, work on personal projects, and generally enjoy myself. The question is where things are on the average, and not having what I want at every minute, which is unrealistic.

But if you find that you feel overwhelmed too often, you might want to consider a few ways of analyzing your situation a bit more:

1. Be harshly honest with yourself. Generally when you find yourself in a situation over and over again, there is something you like about it. Now, there may be stretches where one thing tips into another and upsets what you'd really like for months, or even a year or more. But if you've been in the business for a number of years and still find that you end up in the same situation, you have to realize that you're probably trying to solve a problem doing more of the same, and you have to ask why you're so attached to what you have always done.



2. Really look at the trade-offs. What is it that you get from the business? Do you really need the amount of work/money you're bringing in? If you do need it, then maybe you have to reevaluate the balance you might reach. Or it may be that you're driving yourself to meet a requirement that actually isn't there.



3. If you're working too long and too hard, then you should reconsider the statement that you love the mix of clients. Sounds like it's time to do a profitability analysis - not just revenue, but dollars per hour - on your clients to see how they really stack up. If there is any way to quantify a PIA factor, then do that as well. Maybe, without thinking about it too much, give a ranking from 1 to 10 of each in terms of how much of a pain it is. Then you could find the average PIA number and see how far each deviates from that average, or maybe divide profitability by the PIA number. It might be that you need to get some different clients that are less demanding, or that pay so much more for the demands that you can afford to do less work overall.

Newspaper Industry Boasts Online Ad Growth

Another data point that I pass on as they come in: the Newspaper Association of America in a report claims fourteen consecutive quarters of year-over-year double digit growth in online advertising revenue. Online ads now represent 7.1 percent of all newspaper ad revenue. However, overall ad revenues in the third quarter of 2007 were down 7.4 percent, so even the fast percentage growth in online ads is nowhere near enough to keep newspaper income even flat.

Amazon Kindle and Controling Electronic Rights

By now you've probably heard about Amazon's Kindle e-book reader. I've been thinking a bit more about the economics of it. According to one knowledgeable colleague in a private writers' mailing list, Amazon takes 65% of the money it receives for e-books and the other 35% goes to the publisher. Large publishers are probably getting a better deal - I hope they're getting a better deal. But better deal or not, this is a significant development and one that should command attention of freelance authors. So let's comb through the readily available information to see what we can learn:

• Although journalists are saying that 90,000 books are available, that's not how Amazon phrases it. Instead, it's over 88,000 books, with 100 of the current 112 NYT best sellers. (Who knew there were that many on the various NYT best seller lists - something that is interesting on its own.)


• The screen uses reflected light, and not a back-lit approach, and it only uses power to change the image on the screen, so it should have far longer battery life than other devices.


• It's $400 bucks to the user. Add in the 65% of the sales price it gets, and that seems like a lot. But, the device uses a cellular phone network for browsing and shopping, and there are no monthly fees, so some amount of that money has to go to the carrier providing the service, and has to potentially last a long time. That might explain some of the economics, and why publishers/authors aren't likely to get better deals going forward. Amazon may not be able to afford to give them.


• NYT best sellers and all new releases are "$9.99, unless marked otherwise," which is like saying everything is a dollar unless it's not. That low a level of pricing has two effects. One, it potentially hurts the preceived value of books, and, should this take off, puts competitors into some pretty serious trouble. Do they start more heavily discounting? Because even with the lower price, Amazon makes a bundle. Figure a best selling paperback costs $15. Amazon, or one of its normal competitors, gets maybe a 55% discount, but probably knocks off 30 to 40% of th