The bios say he was hired as an editor at Anchor Books, Doubleday’s pioneering trade paperback imprint, in 1959, that being McCormack’s first job in publishing. The Anchor line had been “invented” by Jason Epstein in about 1953. Leonard Shatzkin, from a position called Director of Research, expanded the Doubleday sales force dramatically — it was by far the biggest in trade publishing — and also invented another trade paperback line, Dolphin Books, in the late 50s. Epstein moved on to Random House in about 1958. So, what I know, without being able to ask either Tom or Len for further details, is that Tom arrived on the Doubleday trade paperback scene just after its charistmatic founder had left the company and when my father was Doubleday’s leading pioneering executive.

At the time, and for a long time thereafter (maybe even continuing today), the standard method for managing publishing economics inside a company was the “title P&L”. That method of scoring made each title its own business. You added up all the revenues attributable to a title, subtracted the cost of producing the books and the royalties paid, and assigned a share of overheads as a percentage equal to what overheads are supposed to be overall. If that accounting showed the title with a profit, it was deemed to be successful. If the costs including overhead exceeded the attributable revenues, then the title was “unprofitable; it “lost money”.

Len Shatzkin didn’t see the economics that way. He saw overhead as a “bucket” you had to fill with dollars of margin. If you filled it to overflowing, the company was profitable. If you didn’t, the company was unprofitable. He didn’t see titles as free-standing “businesses”; he saw them as opportunities to provide dollars of margin to fill the bucket. The score to be kept at the title level was whether the title generated dollars of margin or didn’t. Overall company overhead didn’t figure into it.

Shatzkin had a very simple exercise that demonstrated his point. He challenged the management of his profitable company to look at what their economics would be if they ONLY had published the “profitable” titles and had somehow avoided all the “unprofitable” ones. Of course, those that scored “profitable” were a small minority of them. And they, on their own, didn’t come close to supporting the company’s overheads.

What this revealed was that the arbitrary assignment of overhead title-by-title, which seemed entirely reasonable prima facie, was a logical error. Let’s say the assigned “overhead” for profitability was 35 percent of revenue. By the traditional method of keeping score, only the titles that achieved that standard were “profitable”. But lots of other titles — by far most of them, as it turned out — contributed positive margin at some percentage between 1 and 34 percent. As long as most of the titles the company did achieved positive margin, the more titles published the more profitable the company would be.

Tom McCormack applied that understanding in spades at St. Martin’s when he became president of that company 10 years later. From the beginning, he knew that, within reason, the more books he could publish with the same overhead, the more profitable his company would be. He was unique being a publishing CEO who did the math that way. Nobody else did.

Len and Tom only overlapped for two years at Doubleday. Len moved on to start Collier Books for Crowell-Collier Macmillan. But, genius though he was, he was not the businessman McCormack was. After Collier Books had its plug pulled by the parent company while it was still in development followed by a period when he ran production at McGraw-Hill, Len started his own businesses, which included a pioneering book distributor called Two Continuents. But that effort failed, and in 1979 Len found himself picking up the pieces as he embarked on the consulting career that would support him for the rest of his life.

And his first client was St. Martin’s Press, which by this time had become a pretty substanial enterprise with 10 years of Tom applying the structural understanding of the economics that he had learned from Len. That consulting contract, which included putting Len on St. Martin’s health insurance plan, was a lifesaver for my father at age 60.

Over the years, Tom was always very generous in crediting Len with opening his eyes to the reality of publishing economics. He tracked how many St. Martin’s titles recovered their costs and contributed margin, and I believe the normal score was in the high 80s. By far, most titles St. Martin’s published contributed to overhead, and thus to profits, and thus to growth. And publishing more and more titles became a habit at St. Martin’s.

But McCormack was selective about adopting Len Shatzkin’s insights. He focused on the frontlist; Len focused on the backlist. McCormack never bought into the idea of an oversized sales force. And he really exploited subsidiary rights (headed up by Sally Richardson, herself a genuine Force of Nature), which were never a high priority in Len Shatzkin’s thinking.

But the insight, unique among his peers/competitors, that most titles a competent and professional trade publisher at scale in the late 20th century issued actually “worked”, combined with the phenomenal editorial talent Tom possessed, made him able to outgrow every competitor in his incomparable career. And he was a charming and charismatic guy!

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More has changed in the past eight years than any like period in my prior 50 years of experience. You don’t have to be an insider to know that there were 500,000 titles in English available in 1990 and that more than 20 million are available from Ingram (thanks to print-on-demand) today. And that everything that was ever made available remains on sale through “normal channels” (which is “online”, not “in store”) forever. It doesn’t take a math genius to reckon that a pretty stable total book purchasing and readership constituency will result in dramatic reductions in sales per title.

I have had two opportunities lately to validate my observations, and the sense of drastic change has been confirmed by both.

One source of insight is a new book, “The Untold Story of Books”, by Michael Castleman.  (I was gifted an advance reading copy that tells me the book will be published on July 2, 2024.) Castleman sees three “eras” of book publishing: Gutenberg hand-style presses (1450-1870), industrial printing (1870-2000), and digital publishing (since 2000.) An interpretation of his telling of the story would be that authors steered book publishing until the early 1900s, publishers were in control for most of the 20th century, and that digital technology has once again decentralized the commercial decisions and efforts so that publishers’ power has been diminishing for the past two decades.

The power of publishers did arrive with industrial printing, but what really drove it was the control of distribution. As bookstores proliferated in the 20th century and became the place where most consumers got most of their books, only publishers with sales forces and fulfillment operations could compete in the marketplace. (Before that, authors often “hired” the printers.) The ability to push out thousands of copies of books (on a sale-and-return basis, of course) was uniquely the publishers’, and that meant they decided what went into the marketplace.

One insight that I picked up from Castleman, which had never been spelled out to me before, explains why publishing was centered in New York and why publishers took a “seasonal” approach to introducing books into the market. It all goes back to the Erie Canal. Before the Erie Canal, publishers were distributed among Boston, New York, and Philadelphia. The canal enabled NYC publishers to reach stores in the interior of the country with books on boats, by far the most efficient way to ship these heavy objects.

But the canal froze in the winter. So publishers learned to ship a whole bunch of new books before the freeze (the “Fall list”) and another bunch of new books after the freeze (the “Spring list”). Catalogs reflecting that organization also became standard. The Erie Canal opened in 1825 and only now, 200 years later, might we see the end of “seasons” as an organizing structure for the industry on the horizon. That qualifies as lasting impact.

The second opportunity to test my observations against reality arose when I was invited to a meeting of half-a-dozen publishing veterans who have, in various morphed forms, been discussing our business over lunch in a group called Book Table which goes back to the 1940s! The six other attendees at the lunch I joined were all just a wee bit younger than I am, in their 60s and early 70s. They included a magazine publisher, three book publishers of indies or imprints inside majors, and two agents. The tidbits I picked up from that meeting confirmed how much things have changed in the past decade.

1. One agent has two clients who are successful self-publishers (there are subsidiary rights and foreign rights to occupy an agent.) Two things stood out about them. One is that they both published exclusively with Amazon, without the complement (which I would have thought would be “standard”) of also working through Ingram. The other thing was that they both started working their genres (and they publish exclusively genre fiction) in 2008 or so, before the rush of self-publishers in genres had saturated the market. So they established their brands in their genre marketplace when the competition was still minimal. The agent reports that both of these authors don’t believe they’d be successful starting to do this today.

2. Publishers can’t succeed in these saturated genre marketplaces. Fortunately, a new genre can come along. One that has arisen is “romantasy” (think romance plus fantasy). Because it is new but it has the characteristic of genre fiction that devotees read a LOT of books and LOVE repeat authors, this is working for publishers. But this state of affairs won’t last forever; the romantasy title count and established author base will also reach saturation with time.

3. Publishers used to routinely achieve advance sales for new books in the thousands. The chains in those bygone years amounted to a signficant chunk of those sales. Now publishers celebrate an order from Barnes & Noble (the only really significant chain remaining) of 100 to 200 copies. And that’s far less than 1 copy per store in the chain!

4. It is, indeed, almost impossible to get a significant advance from a publisher unless sales are assured either by a highly branded author or an author platform of some kind that has significant promise for marketing and sales.

The world we’re now in is one where making money on new books — as an author or a publisher — is staggeringly difficult. Big publishers can still make big money because the truth that “everything ever published is always available” is a double-edged sword. Publishers with tens of thousands of titles on their backlist can make money selling quantities which wouldn’t have been worth printing last century when they were published. Across tens of thousands of titles, even sales in the hundreds per year add up to a lot. With ebooks and AI-generated audiobooks and the global reach of digital marketing, a lot of additional sales can be booked on titles that would have stopped printing and reverted to authors in the old days.

Of course, books have sustained themselves as “commercially viable” long after most of the newspapers and magazines of our youth have ceased to exist. Authors have a hard time making money because they’re competing with everything ever written, but the same is true for singers and songwriters and for the talent that makes TV and movies. The good news is that people still read lots of books and that anybody who has the content and wants to deliver it into the marketplace as a book can do so at a highly manageable cost. The bad news is that new careers delivering the creative works in a structured and predictable ecosystem that values experience and a network of professional contacts are vanishing before they begin.

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Here’s the long story short. The task of establishing a new title in the marketplace has gotten progressively more difficult for more than two decades and will continue to. A business that used to be primarily focused on the current batch of titles is now increasingly attentive to the long tail backlist. This is structural, not cultural.

When I was a pup, books were mostly sold in bookstores and bookstores focused their stocking attention on what was new and likely to be hot. A plethora of book review media — led by the NY Times Book Review but complemented by reviews in newspapers and magazines and author appearances on radio and TV timed to a publication date, combined with robust and ubiquitous display of featured new books in thousands of bookstores across the country — enabled thousands of titles every year from publishers large and small to sell many thousands of copies, many doing well enough to “backlist” and become enduring sellers.

But, in those days, they didn’t all become enduring sellers that the publisher would keep available “forever”. Keeping books “in print” was not automatic, even though the penalty for not doing so was frequently losing the rights to that book to author reversion. In the 20th century, each “next printing” was a bit of a commitment, usually in the low thousands of copies. If the book was only selling dozens or hundreds a year, it made economic sense to kill it.

Two things changed that calculus. Ebooks don’t require inventory. And Ingram’s increasing competence with print-on-demand — tied, of course, to their wholesaling operation that reaches every bookstore and online seller in the world — meant there was a lower-margin but virtually investment-free alternative to ceasing publication of any title.

And, at the same time, the shape of the market was changing, and continues to. Most books consumers buy are still printed rather than electronic, but stores are not where most of them are purchased. Various online resources, starting with Amazon but also through an increasingly long tail of web sites sourcing primarily through Ingram (who will ship direct to the website’s customer, requiring no “handling” by the creator of the sale), now sell the vast majority of the print books (and, of course, ALL the ebooks.)

Although I get very little pushback from sage publishing veterans when I suggest that “trade publishing as we knew it is dead”, it isn’t at all clear that the surviving incumbents see it that way. (In fact, Dohle pretty much said these are the “best of times”.) They all know, of course, that their sales increasingly come from the thousands of titles they control from their years of publishing rather than the new titles issued this year or recently. But nobody has (yet) said publicly “publishing new titles is getting very hard” or “we’re going to publish a lot fewer new books.” (Of course, whatever the established publishers do, the world will publish many more new books; more in a month than we used to get in a year.)

But it does appear that cutbacks by the big publishers on new title publishing is the current reality. Agents are well aware that their business just gets harder and harder. Big publishers are increasingly encouraging longtime veterans of their companies to take retirement packages. In the 20th century, it was a perfectly reasonable ambition to start at an entry level position at a publisher and have it lead to a many decades-long career. Very few sentient young people would see that as a sensible plan or expectation today.

The math that explains this is compelling. In 1990, there were about 500,000 titles in print in the English language in the world, and not all of them were easily available. Today there are about 20 million titles in Ingram’s Lightning Print database and if you order one tonight, they’ll print it in the next day or two and send it to you. So the competitive set for each new title coming into the world has increased by FORTY times. And the publishers no longer have a moat around their new title launchpads. Bookstores can’t sell enough to make a book happen; the marketplace is online and incumbent publishers have a vastly diminished advantage in that world over many other players.

In fact, publishers increasingly depending on “Internet influencers” to push their books to their loyal followers are now seeing those very marketers turned into competitors by the start-up Bindery Books. So agents will now be considering Bindery as an alternative to PRH or HarperCollins.

And all of this has happened without any help from AI.

One thing AI threatens, of course, is a massive increase in the number of titles made available. One observation missing from the mostly-fabulous AI presentation from PW was the acknowledgment that a 40-fold increase in actively competitive titles has already taken place over the past two decades. There is very little doubt that a new surge of titles in the marketplace from AI will only compound the situation that has changed the landscape over the past two decades.

I’m very bullish on AI and what it will do in many ways. What the PW presentation made clear is that, across the industry, people are experimenting with it for a multitude of tasks: title creation (of course, although that didn’t get the emphasis it deserved in the PW event), marketing from creating copy to finding audiences, and in production in a multitude of ways. But also clear, as much from audience reaction as from any particular presenter, was that the image of an industry where the author writes a book (and fiction was most frequently discussed), gives it to an agent, who sells it to an editor who shepherds it through a publishing process, which with many “rinse and repeats” which result in authors making a living from selling books, is more vivid in many minds and hearts than it is reality anymore.

The day started with Dohle saying this was a great time for book publishing. Which, indeed, might be true for PRH with its nonpareil backlist and bigger-than-anybody scope. But it isn’t generally true. The view from here is that trade books will have two distributors by the end of this decade: one publisher (probably PRH) and Ingram. Books will continue to be published in increasing numbers because you no longer need to have a big organization under you to publish one, and the investment required to publish any single title (beyond acquiring the content) is less than it has ever been.

The PW AI day ended with Ethan Mollick talking about the myriad ways to use AI and making it clear that AI is only going to get better and more powerful. And that people trying different ways to use it was going to be the path to making it an increasingly important part of the workflow.

Whether new leaner publishers with Internet followings and AI “staffs” will enable more authors to have successful careers in the new publishing era is something we will just have to find out. But the view from here is that anybody who expects anything like a revival of traditional trade publishing, particularly one that provides a sizable number of authors with a real living, is going to be very disappointed.

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The primary challenge is that no content ever becomes unavailable anymore. So every book in the history of publishing is competing for attention with everything “newly available”. The other delivery forms suffer from a variation of this theme. For TV and movies, it is the same problem; all the content from the past is suddenly competing for attention every single day. For newspapers, the challenge is the loss of territorial exclusivity: once you’ve read the story of the latest bill passed by Congress or the account of last night’s game involving your favorite team in one of the prominent national and international sources of news (led by The New York Times and the Washington Post), you have no need to get that news again in your local daily paper. The failure of local papers demonstrates that most have no sustainable commercial proposition with local news alone. And magazines, being collections of shorter pieces, are now seeing each of them competing on their own against a virtually limitless supply of article postings and blogs from literally millions of sources.

In the book business specifically, this means that the world publishers (and I) grew up in, where those serious about the business exposed their titles through a retail network that didn’t allow amateurs and newcomers easy access but which was where just about all books were bought, has become an online purchasing environment open to everybody. In 1990, there were half-a-million books in English theoretically available, and the chances were that something first issued five years before, let alone 25 or 50 years earlier, was not part of the mix anymore. Today Ingram has about 20 million titles in their print-on-demand database that they can deliver tomorrow from an order delivered today.

So the competitive set for each new title coming into the world has increased 40 times. And the publishers no longer have any moat around the retailing marketplace protecting them.

The good news for longtime publishers is that their entire backlist — not just those titles they keep alive in the stores — now contributes to sales and profits. But the really bad news is that establishing a new title keeps getting harder every single day. The first instance of a publisher announcing that they’ve given up trying to do it that I’m aware of occurred last week when McGraw-Hill announced they’d no longer be issuing new business titles. (Although they hastened to tout the extensive backlist they’ll continue to promote and sell.)

Every multi-book writer trying to sell her next book knows this. Every agent trying to remain active in the business knows this. And a new proposition — the “hybrid” publisher, which charges the author the direct cost of putting their book out in return for a higher royalty — has become a growing part of the new title mix, along with authors who just try to do it themselves using Amazon’s Kindle Direct Publishing and Ingram’s Spark to handle the mechanics of printing, distribution, and collecting the dollars from the consumers.

Critical players among the new cast of characters are a breed called “Internet Influencers”, who are people with growing followings who are guides to the world of content for their own audiences. Book publishers (and other content purveyors and marketers) are well aware of them. They attempt to find them, understand their audiences, and get them to mention or push the new books coming out that are relevant to their followers. Indeed, the one growing part of a book publishers’ team is their staff of “digital marketers” (while sales reps who call on stores are more and more dispensable). Those marketers largely live on their ability to find and promote to those influencers.

But there has been a structural deficiency to this arrangement. The influencers are the key to making book sales happen, but there has been no mechanism to enable them to share in the revenue their efforts make possible, and to incentivize them to do more of it. That is about to change. A new publishing model, created by a start-up called Bindery Books, is in its early days empowering the influencers (a group Bindery calls “tastemakers”) to lead imprints and select books they know will resonate with their readers and earn a stake in the books’ revenues.

Publishers Weekly just did an article on Bindery that explains their process. First they give the influencers a structure to enable paid subscribers to an influencer’s membership community (like a Patreon for book curators.) This is tiered at very manageable $5, $12, and $25 monthly fees. Large enough curators can divert half their subscription revenue to fund the acquisition and production of new books, inviting their members to have a front row seat to the publishing process and a feeling of investment upon publication.

They are starting with what seems a very generous $10,000 standard author advance for books a “tastemaker” imprint wants to issue. Then Bindery provides the necessary organizational and management structure to publish the book and make it available in both digital and print formats. No surprise that Ingram is a key provider of services to support those efforts, including sales and distribution to the book trade. The influencers are in for 25 percent of the revenue for the books they publish. Authors get half. Bindery takes the balance. And thus, the real enablers of new publishing projects, their creators and the marketers to their core audience, are rewarded much more generously than they are in the traditional model.

And it seems very possible, perhaps even highly likely, that a large number of decentralized communities of interest will “find” books to be worthy of publishing that the traditional community of “professionals” would have missed.

Agents are submitting proposals to Bindery. Influencers are just starting to establish their subscription bases and book imprints. Bindery is still putting together its internal team to manage their trade business. It will be some months before we get a real read on how effective this new way of organizing the world for publishing new books will be.

But the harder it gets for agents to place their books with traditional publishers, the more taking a shot with a new proposition like Bindery will make sense to them. And with the influencers that publishers already recognize as the key drivers for book sales in the new world we’re living in vested the way they are, one has to assume this model has a real chance to succeed.

As Bindery’s own website makes clear, I am among an advisory board to the company. But so far there is nothing for me to take credit for. The Bindery executive team dreamed up this new approach and have built the engine to deliver it. I have a bit of an inside view, but I am waiting along with everybody else to see how this new approach works.

It is perhaps worth emphasizing that Bindery is not primarily aiming to serve the millions of self-published authors who are now part of the landscape. Rather, they are trying to put a new marketing reality to work for the books with the best chances of success, which is why they are paying advances and working to get submissions from agents. Perhaps over time, the influencers/tastemakers will put their large followings to work reading the broad range of over-the-transom manuscripts that any way to publish will attract. Bindery’s approach is aimed at the books publishers would want to buy, giving them an extra boost and rewarding the new marketing channel that has partially replaced what has been lost in the old retail marketplace.

The post Bindery Books: A Way to Restructure the Book Publishing Model appeared first on The Idea Logical Company.

So we have gone from a world where about 95 percent of books were bought in stores to a world where that number is now more like 20 percent (by my guestimate.)

When you think about it a little bit, that makes all the sense in the world. Books must be the very best single consumer product to purchase online rather than in a physical shop. For five big reasons.

1. The choice of book titles has become so vast — going from about 500,000 titles in English three decades ago to about 20 million titles available through Ingram today — that the chances of finding any particular book you are looking for in any particular store is vanishingly small.

2. You don’t need to try on a book or look at it closely to know what it is. In most cases, the cover that you see, the description you can read, including its metadata, will tell you what you’re getting so that the chances of surprise or disappointment is also vanishingly small.

3. You almost never need any particular book “right now”. Almost always, 2 or 3 days from now is just fine. (And you wouldn’t find it “right now” in a store most of the time anyway.)

4. Books are heavy. You don’t want to carry one (let alone two or three) around with you if you aren’t coming straight home from the store. Getting it delivered to your home is a much more convenient option.

5. Price variation is limited. Books usually have prices set by the publisher which determines pretty much what you’re going to pay for it, regardless of where you buy it. (And online can be cheaper some of the time, anyway.)

So, if you know what you want, the chances of finding it in a store are too small to be worth the attempt. And if you don’t know what you want, the range of choices you’ll find online dwarfs what you’ll find in any stores.

It is true that some people like being in a room full of books. It is true that some people like having the choices of possible reads “curated” for them. And it is also true that the book might be purchased as a gift, so you do (in that case) need something right now. There are people shopping for illustrated books and children’s books where there can be value added by seeing the book up close. But those customers constitute the bookstore audience today. Thirty years ago every purchaser of a book was the bookstore’s audience.

It is not Borders’ fault that they disappeared. And it isn’t Barnes & Noble’s fault that their shelf space (if not their number of locations) continues to shrink. Quite aside from the sales lost to ebooks and audiobooks (and they aren’t insubstantial), bookstores have a nearly insuperable challenge creating a compelling reason to use them.

There will always be bookstores, but they’ll be increasingly rare and idiosyncratic.

My friend Thad McIlroy has written a brilliant piece for PW about the impact of AI like ChatGPT on book publishing. In it, he suggests that it could kill trade publishing. I loved Thad’s piece, but, to my way of thinking, “trade publishing” is already just about dead. After all, the term was invented because the books were sold through the book trade, and I have long believed that the book trade is no longer capable of supporting much publishing. Thad’s piece motivated me to have a chat with him, which resulted in me delivering him this summary about the bookstores. He encouraged me to put it writing. I encourage anybody reading it to read his piece on AI.

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The book publishing business in which I have spent my working life since the early 1960s is disappearing. Of the Big Five (Penguin Random House, HarperCollins, Simon & Schuster, Macmillan, and Hachette), three have lost their CEOs within the past few years. With the government having decided that PRH acquiring S&S constitutes too much concentration, it is now an open question whether any merger among them will stand regulatory scrutiny.

Since the Big Five now account for the lion’s share of the commercial publishing business (they having acquired many of the larger companies below their size over the past few decades), this means that their growth from now on has to come organically, rather than by acquisition.

That’s a problem. From here it looks like general trade book publishers of scale can’t grow organically anymore. (Small niche publishers sometimes can, but they don’t add up to enough to become elements of a strategy.) The business has transformed around them and it is really no longer possible to do that. Two massive changes over the past 25 years in the way the industry is and works assure that.

One change is “where the books come from.” It used to be that all the books came from publishers who were “in the business” of delivering books to consumers. These days, publishing by entities that are not primarily commercially-driven — from self-publishing authors to entities that live in some other world but which can use books to the benefit of their main enterprise — is responsible for the vast majority of what is perhaps a million new titles a year hitting the marketplace. (Only near the end of “the good old days” did that number reach six figures.) So the commercial publishers — and every title they issue — have a lot more competition from other new titles hitting at the same time than they ever did before.

And on top of that, the old books don’t die anymore, thanks to print-on-demand. So a new book issued in 1990 would have competed with 500,000 other possible titles for a sale. Today the number of competing titles is about twenty million. And some smart people put it substantially higher than that.

The second big change is how the customers for books find and acquire them. In 1990, sales of consumer books were overwhelmingly in  bookstores and mass merchant retail locations. That meant that only a serious publisher who committed to “covering” the stores (a sales force) and “providing service” to them (a reasonably efficient warehousing and shipping operation) could compete for those sales. Today, it is likely that fewer than 30 percent of physical books are purchased in retail locations. They are transacted for online, as are all ebook sales. So the moat that kept the path to readers in the control of real publishers is gone. Online sales venues are available to anybody, including a 1-book author. And when the potential purchaser sees the “page” for a book on her computer or phone, it is pretty hard to tell which ones belong to a big publisher and which ones don’t. (If the potential reader even cares…)

The shift in the marketplace and its economics has good news and bad news for big, established publishing houses.

The good news is that they have gold in their extensive backlists. Their revenue is no longer limited to the titles they have placed in stores, as it was in the past. Short publicity breaks triggered by an author dying, a new book coming out that recalls an older one, or a set of circumstances in the world that make an old backlist book newly relevant (however briefly) can and will result in sales.

The bad news is that it is harder and harder to publish new titles profitably and establish them in the marketplace. Organic growth is an artifact of a prior time. It doesn’t happen anymore for a general trade house.

The financial impact, so far, has been that sales remain pretty flat or slowly declining but profits are, so far, holding up well. New titles require risk. The margins on older titles can be reduced if the copies sold today are printed on demand, but they remain strong if old inventory is being sold off (particularly if no further royalties are due) or if ebooks are what is sold today.

But if big houses can’t grow organically, there are very few smaller houses to acquire, and anti-trust prevents them from combining with each other, they are doomed to a long, slow, decline. That’s where we are, and it is not a happy place.

My friend and longtime publisher David Wilk presents the analogy of a forest destroyed by climate change. It happens gradually, then more quickly. And as the old big trees die, different growth takes its place so that the forest is transformed.

In the new world (forest) of book publishing, the big publishers are becoming extinct. They can’t grow. Their backlists will inevitably decay. They will be managing an asset base that will produce profits for a long time but will support less and less of a company. That’s no fun to manage at the top, and it means that the job at the top isn’t nearly as attractive as it was when all those execs entered the business. So the big publishing house just isn’t the environment it used to be.

The fact that new title lists are being cut will be increasingly obvious.

The incumbents who can’t afford to stop working early and who are in well-compensated positions will be holding on to their jobs with both hands. The opportunities for them to move out (except to retirement or career change) will disappear. And that means that there will be no place for younger folks to move up.

It is sadly ironic that publishing has chosen this moment to be activist about hiring from minority groups that had been excluded from publishing house opportunities for years. Just when the jobs are no longer tickets to a multi-decade career, the previously ignored are invited in.

One of the next “shoes to drop” will be when one of the Big Five starts reducing the capabilities it covers with fixed-cost overheads, like sales reps calling on stores and a warehousing and shipping network to serve them. Ingram stands ready (as they have for years) to provide that at scale without a big fixed investment and that makes it much easier to “shrink” over time. Or a sharing of these capabilities might be an acceptable (to DoJ) alternative to mergers. It seems likely to me that long-term thinkers in the Big Five houses are exploring these scenarios.

This piece is being written at a moment when Barnes & Noble’s news is “we’re growing” and a few people have credited their CEO, James Daunt, with solving the “problem” of their prior sluggishness. There’s growth, they tell us. The view from here is that it is, at best, a blip. While they may have succeeded in making their stores a hospitable place for people who want to surround themselves with books — and there are, indeed, such people — it remains a fact that anybody who knows what book they want would be ill-advised to go looking for it in a store. And they wouldn’t. That was the base of the bookstores’ business in the age when trade publishers were growing along with the trade.

But a dim future for big publishers is not a dim future for readers. All the books that were ever published will stick around and plenty of new ones — more than in the bygone days — will make their debuts every year. Digital technology makes it easier and easier for the book consumer to search and find things, by genre or topic or author, and even to “sample” a book before they buy it as a routine matter. Rooms full of books (bookstores and libraries) will be around and accessible for many years to come, even if they decline in overall importance and don’t enable a booming general trade publishing network. But the commercial publishing world that readers have lived in for about the past 100 years has changed and shrunk, and it will not grow back.

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I put it up. My subscribers got it by email. And then Google put a big bright red WARNING screen on my site saying “malware here, don’t go!”

So my team went into action. The first several scans executed by the experts at Oxford Mediaworks found no evidence of malware. But then the hosting outfit we employ under their direction, WP Engine, did a number of additional scans and, lo and behold, one found that Google was absolutely right. Somehow malware had creeped into my site. So we rooted it out.

It took Google a little over a day after being told the fix was done for them to withdraw the warning. Meanwhile, Oxford Mediaworks installed some additional layers of security. So now idealog.com is all clear and ready to receive visitors again.

I’m glad to welcome site visitors back and even more glad that this disruption isn’t to a site I depend on for a living. I still don’t know what happened or how, and why it would have evaded the many professional precautions we take to prevent it, and then require what we had to go through to actually find the details. These will remain mysteries of the Internet. But I do know that, thanks to the caution of my friends at Oxford Mediaworks, nobody’s subscriber data has been compromised. That mailing list is maintained on a system separate from the website.

Looking forward to receiving comments on the original post now.

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**Thirty years ago, each new book coming into the world in English was competing with 500,000 incumbents that were (at least theoretically) available for purchase. That was the total number of books “in print” in English in the world. Today that number, with a big boost from Ingram’s Lightning print-on-demand capability, has grown to more than nineteen million titles.

**Up until twenty years ago, bookstores sold the lion’s share of the books. Only serious publishers with sales forces, warehouses, inventory, and relationships with retailers could compete for sales. Now bookstores account for as little as 20 percent of the sales. Most sales are made through online promotion and availability that give incumbent publishers no particular edge. So increased title competition has come along with the vanishing of the unique publisher sales and distribution advantage.

**In the pre-Lightning era, publishers had to maintain inventory in a warehouse for any title expected to compete in the marketplace. That requirement cost publishers money, but also served to eliminate competition. No inventory holding is required today to have a title listed as available being able to ship within days, if not hours. That saves incumbent publishers some cash investment, but unleashes a slew of new competition.

**In those bookstore-dominant days, publishers could safely focus their marketing efforts on those titles just about to come out until a few months after publication day. In today’s world, titles can “pop” for myriad reasons that have nothing to do with when they were first issued. The death of an author, the surge in a book on the same subject, the sudden interest of a celebrity — all of these things can make a book suddenly competitive and promotable and no inventory has to be “in place” in stores to support it. Publishers have steadily increased the number of digital marketers on their staffs and now employ a variety of “listening” tools to detect what books on vast backlists should get attention, but the challenge of allocating scarce marketing resources across an increasing array of  apparent opportunities grows ever more difficult.

**Throughout the history of trade publishing, there were established venues in which to “work” the titles. You needed to get new titles promoted in the trade press and mentioned in as many of the hundreds (or thousands) of newspaper and magazine book reviews as possible. There were select television and radio shows that effectively promoted books. And if you wanted to keep a backlist title alive, the most important thing you needed to do was keep it stocked on bookstore shelves. Because there were important vehicles that were used repeatedly, established publishers developed longstanding relationships with established promotional outlets. Today, much of that established network has disappeared and a vast amount of the promotional opportunity for books, especially non-fiction, is through vehicles that arise as opportunities for the first time. An established publisher often has no more cred with them than the self-publishing author or fledgling publisher does.

**But perhaps the biggest change of all is that publishers aren’t “necessary” for an author to have a “published book” available for promotion or educational or any other use. With very little cash or know-how, anybody can publish a book these days. Any author who commands an audience through a website or other business network can make a book available without a publisher. So putting a book out through a publisher is now a choice, not the only way to accomplish the task.

And this takes us to the new decision-matrix for an author who is both not a “typical” author but also not a unique one: a business school professor who previously self-published books he wanted to have available for his students, but who now has a title of much broader interest.

The author in this case is Ed Rogoff, a business school dean and professor for many decades. A few years ago, Ed explored self-publishing to make his “Bankable Business Plans for Non-Profits” available for the classes he taught. He wasn’t particularly concerned with the revenue from the book, but he needed it to be available for students in classes he was teaching. A later variation on the Bankable Business Plan idea (the first of which had, indeed, been put out by an established publisher) was BBP for Entreprenurial Ventures. Having that book to show got Ed a new business school home, at the Wagner School at NYU, for that class.

The book leading to the class, rather than the other way around, was a sign of a world turned upside down by the capability to self-publish. And it shows why an academic might self-publish. You can do it fast and you can present your material in the ways best suited to sell a “course”, rather than to “sell books”.

But the book Rogoff is working on now is completely different. It has a much broader audience. And it isn’t something he needs to sell a course or to make available to students. And yet, it is a real question to ponder whether a publisher or a self-publishing effort would be the better strategy.

The book comes out of Rogoff’s life experience, not his academic interests. He was a lifelong hemophiliac, living through the age of AIDS, which generated a long period where blood transfusions — often a necessary component of a hemophiliac’s survival — became a game of Russian Roulette. But, even before AIDS arrived and after reliable testing for it was available (the period that bracketed the greatest mortal danger), being a hemophiliac requires regular attention and concern. It is a condition that, when one has it, means you can’t live what the rest of us consider a normal life.

Then, about ten years ago, Ed suffered a more immediate threat. Because of Hepatitis C which he contracted from a transfusion as a teenager, his liver started to fail. The only solution was a liver transplant. So he got it, and survived it. But, better than that, a new liver meant his hemophilia was cured. Suddenly, deep into his 50s, the Sword of Damocles was removed from its position immediately above his neck. Since the liver transplant, Ed’s life expectancy has been “normal”, which means he has more future in front of him now when we are in our 70s than he had when we met and became friends over 50 years ago.

Ed’s new book is called “Scary Diagnosis”, and it is a guide for people who get a health evaluation that will change their life going forward. It covers the immediate challenges — finding the right doctors and wrapping one’s brain around the diagnosis. But it also covers all the ways life will change and the various kinds of help the diagnosis says you’ll need. The chapter titles pretty much tell the story about how much a “scary diagnosis” leads one to think about.

Chapter 1: The First Shock
Chapter 2: Life or Death
Chapter 3: Vulnerability Squared
Chapter 4: Sick Children
Chapter 5: You Can’t Do It Alone
Chapter 6: Must You Lose Your Dignity
Chapter 7: Distrust and Suspicion
Chapter 8: Selecting and Managing Your Doctor
Chapter 9: Time Warp
Chapter 10: To Share or Not to Share
Chapter 11: Managing the Hospital Experience
Chapter 12: How Friends and Family Treat the Patient
Chapter 13: Coping with Big Bad Bureaucracies
Chapter 14: By Living Your Life You Must Overcome Being a Patient
Chapter 15: Never Forget that You Are in Charge
Chapter 16: Finding Strength and Gratitude

At first, it seemed self-evident to us that Ed would need/want to find a publisher for this. After all, this is a subject of “general interest” for which there are customers in every bookstore.

But then, Ed took another step. He researched the potential partners for marketing the title with him; entities that might want to promote this book in their world. Of course, that is any entity that is focused on any of the many diseases and conditions that deliver a “scary diagnosis.”

It turns out that there are hundreds of them. Maybe thousands. And each of them could deliver a productive relationship from outreach. Each of them could post content or provide a useful endorsement or reach dozens or hundreds or thousands of potential customers for “Scary Diagnosis” on their own.

Reaching out to and then engaging with all these entities is a massive undertaking. The good news is that the challenge isn’t time-sensitive. The advice in the book will be as useful two years after it is published as it will be the day it is first available. But would a publisher with thousands of books to market sustain the effort to connect with all the possibilities for “Scary Diagnosis”? And, if not, would they sell enough through “conventional channels” to make up for not having hundreds of powerful potential teammates?

The book isn’t completely written yet so Ed and his “advisors” have time to contemplate this before commencing on a path, either to engage an agent and seriously look for a publisher partner or to launch a self-publishing effort. Doing the latter does not preclude later going to the publishers, who might come to the book after a lot of its validity and appeal have been established. But it would certainly seem that this is a case where the diligent self-publisher might be the better solution in the long run just because the book will get a sustained marketing effort across far more individual opportunities, all currently outside most publishers’ promotional realms, than a publisher of many books can justify for just one title.

Of course, the decision is made a little easier by the possibility of turning the “conventional” book marketing on the ebook side over to Open Road. That assures a baseline of marketing activity that, except for the initial rollout, is probably as good or better as anything you’d get from any other publisher. As you can see by the link in this paragraph, that was another story.

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What this decision says to me is:

1. None of the Big Five can merge with each other without triggering the same concern Judge Pan cited in making this decision. That will not be good news to Hachette and HarperCollins, both of which opposed the PRH-S&S merger but probably hoped they could pursue S&S if the publisher remained independent.

2. The five biggest publishers are probably at their high water mark for market share. The only way to expand a publishing house is to have a larger number of active titles. Publishing new titles profitably has become exceedingly difficult. But publishers can increasingly milk sales out of the long tail of backlist, thanks to the new digital marketing world we live in. So the biggest publishers have grown their title base by acquisition. This decision would appear to cut off that avenue, or at least cut publishers off from the biggest potential additions.

3. The biggest winner with today’s decision is Ingram. The list of titles distributed and managed under their auspices can continue to grow, because Ingram doesn’t buy the companies or own the titles under their umbrella. Instead, they provide services that require scale to publishers without the publisher needing to finance the overhead. They can pay “by the drink”. So Ingram’s steady growth in title count and sales volume can continue.

4. The expectation here had been that publishing would continue to consolidate until sometime later this decade PRH would be the only one left. Thanks to this decision, that won’t be. The Big Five will continue to operate as shrinking but very profitable entities for a long time. In fact, one would expect over time that they too, one by one, will give up maintaining overheads in favor of using Ingram themselves. So there won’t be One Big Publisher in ten years, but there very well might be One Big Distributor.

The one part of all that which probably requires more explanation is the second point, that publishers can’t reliably publish new titles profitably anymore.

When I (and most of today’s senior executives) were coming up in the business, almost all books sold were sold in bookstores. So only publishers with a selling relationship with the stores and the operations capability to deliver to them could play. There was a moat around their activity that prevented interlopers or amateurs (or “self-publishers”) from being truly competitive. For that reason, for many years, established publishers could reliably push out some thousands of copies of every title they issued and, in fact, achieved positive cash flow on a very high percentage of them. And then some stuck around to become longterm backlist.

In those halcyon days, three decades ago (or shortly before the arrival of Amazon and then ebooks), there were no more than 500,000 individual titles available in English in the world. So each new book from publishers competed against 500,000 existing books and was assured a minimal exposure through bookstores.

Today Ingram has nearly 20 million titles set up for printing on demand, which means they can ship a copy you order today to you tomorrow even if it isn’t printed at the moment. So each new title is competing against 40 times as many competitive titles as one did back then. And there is no assured distribution at all. Bookstores have shrunk in number and in size so that perhaps as little as 20-25 percent (or perhaps as much as 30-35 percent, but no more…)  of print book sales are made at actual retail stores. All the rest of it, print and (of course) ebooks, is transacted online. There are advantages to being a big publisher in that context; you have more digital marketers on your staff and more digital tools and information to apply to selling what you have. And anything you have can be sold anytime. No need to get “inventory in place” in order to capitalize on a marketing break.

But the moat is gone. The inherently advantaged position of a title issued by an established publisher is diluted to near meaninglessness.

The big publishers have reacted to this change over the years it has taken place by getting smarter and smarter about tending to their backlist. Digital marketers look for opportunities, not just to push out what is new. But the new advantage to size is the number of titles you have to work with. More titles means more opportunities. And if you find it hard to get more titles by publishing new ones, acquisition is the obvious strategy.

Now growth through acquisition is an avenue that has been sharply curtailed. The Big Five could start trying harder to compete with Ingram for the distributed titles; one wonders how the judge would have reacted if PRH did a deal to distribute and provide scaled services to S&S, which is what Ingram could do. All the big publishers have distribution clients now. But serving dozens or hundreds of publisher clients is not a trivial undertaking. Ingram has spent years building the systems to do that.

Where things stand leave the Big Five in a currently profitable but increasingly difficult spot. For now, at least, the biggest authors who generate a pretty much assured level of sales can count on continuing advances. The fragmentation of the business, where perhaps a million titles a year are being put into play by self-publishers of various types, will continue. And Ingram, whose business model has always been about providing scaled services that enable all aspects of publishing, will continue to grow as they have for years.

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The short summary is this. Open Road is managing digital marketing for more than 40,000 backlist titles, which include those they had signed up for themselves during their early life when grabbing ebook titles not covered by then-current contracts fueled their growth, plus a larger number that have come in the past few years from publishers using their Ignition marketing service. Their system canvasses for marketing opportunities across a range of opportunities we’ll describe further below, and then takes an action on approximately 1800 titles every day. That adds up to nearly 55,000 titles receiving a marketing action each month, or more than 1.3 marketing actions per title available each month.

(Obviously, many titles have more than one action taken for them and some titles don’t get any in a given month.)

That summary alone should help any other publisher that thinks they have a fully automated marketing system decide whether they’re comparable. The internal self-check is: do their monthly marketing actions number 1.3 times the number of backlist titles they have available to sell?

After they accept titles for their system (and most that publishers submit are approved), Open Road does a metadata review and improvement exercise for every title before they activate the actual marketing. That is also an automation-assisted exercise and it results in improved metadata that the publisher is free to use for their own marketing efforts. (Remember, Open Road is marketing ebooks only, although, obviously there is a “lift” effect from their efforts on the print and audio versions of the same books.) That’s a considerable ‘free” benefit for their publishers that, in my opinion, Open Road has made too little of in their self-promotion.

While much of what Open Road does for the titles rests with its own audiences, they have also built a system for “newsjacking” that allows them to pick up signals that are having a direct impact on hits to product pages and conversions at retail. What are the signals Open Road is looking for? This surely resembles what their competitors also seek. Changes in the news cycle that emphasize a specific subject covered in a book. Social media activity around a subject or author. Comments from an influencer. The author passing away. A new book by the author being issued. They’re acutely aware of the intersection of the subject, author, social media platform, and where any particular story broke.

And, when they spot an opportunity through that scan, what are the tools Open Road’s automated systems are directing them to employ?

Like other big publishers, Open Road has a number of “vertical” websites and each issues a companion daily newsletter. These are Early Bird Books (a daily eBook “deals” newsletter and website); The Lineup (true crime, horror, paranormal); The Portalist (science fiction and fantasy); Murder & Mayhem (mysteries and thrillers); The Archive (history and non-fiction); and A Love So True (romance). They also have two newsletters with consumer interests that range across their websites: The Reader (literary fiction) and Open Road Books for Young Readers. Open Road uses these tools themselves and also “sells” placements to other publishers not signed up with them for overall marketing through Open Road’s Ignition offering. (That is, they offer those human marketers at the other publishers the opportunity to decide to buy access to highly segmented niche audiences.)

And, like most other marketing-active publishers, Open Road is doing promotions with Kindle, Apple, Nook, Kobo, Hoopla, Overdrive, and Scribd regularly. They also work with BookBub, Humble Bundle, Epic, Fable, Library Ideas, and Odillo. And they place social media ads with TikTok, Pinterest, Facebook, Twitter, and Instagram.

In other words, the books the scan picks up as opportunity titles are arrayed against dozens, if not hundreds, of potential ways to exploit the moment for them. And 1800 separate instances of putting the book in front of a selected audience are executed. Every day.

Sometimes the action requires “work”, like nominating titles for promotions. If it does, that is also automated. This is another important distinction between what Open Road is doing and what everybody else is doing. Filling out the nominations for many of these opportunities is a non-trivial exercise if it is being done by “hand”. It is self-limiting. Open Road doesn’t suffer from those limitations. If 250 titles today should be submitted to BookBub, the nominations are submitted for all of them. Open Road believes that they deliver a 500% improvement in the number of promotions accepted, no doubt fueled by the massive increase they create in the number of promotions properly applied for.

The leverage this automation provides was illustrated by an exchange I had with an Open Road executive a few months ago. I “sagely” observed, “I bet you can learn a LOT from ten dollars spent on advertising on Facebook.” What I meant was that the Facebook data on respondents to ten bucks worth of ads would provide important clues about which Facebook users to “choose” to expose to a larger campaign.

“Yes, you could,” I was told. “But wouldn’t you rather put down your ten dollars where you knew you would get thirteen dollars back?”

That response rang two big bells for me. One was that Open Road knew, or could at least make a well-educated guess, which titles would deliver a $13 return on a $10 bet. But the bigger one underscored the massive advantage of their automation. If you had to use humans to place those $10 bets on Facebook, you’d lose money getting $13 back. Doing it 100 times or 1000 times with automation is very profitable. Doing it manually would cost more than it would gain you.

Some of the actions taken each day are follow-ups to prior actions. For example, social media ad placements that deliver above threshold ROI metrics are iteratively escalated to ever higher levels of investment until the metric tells the system to stop or scale back.

There are two useful ways to view the benefits the Open Road system consistently delivers. The simplest metric is the change in sales (revenue) across a basket of 1000 or 5000 or 10,000 titles. The short summary of that is that overall monthly sales revenue for the cohort will double in about 60 days and continue to increase less dramatically for a long time thereafter.

But the other is how many titles Open Road can move from “just about dead” into ranking among the top 100,000 titles, which triggers Amazon and Google algorithms to kick in that provide even more of a boost. It is a big deal to a publisher if they can take 5000 virtually dead titles and find after 90 days with Open Road that 500 of them are in that top 100,000 category. That really constitutes a “new lease on life.”

Since all very big publishers know that they have literally tens of thousands of titles their human marketers will never touch, it makes sense for those who really accept the proposition that automation can achieve real results to turn the marketing of those over to Open Road. (And that’s even before the publisher examines the “standard” Open Road “deal”, which takes nothing from the sales any title achieves until it passes its prior year’s revenues. Open Road takes all its compensation from the increase in ebook sales and nothing from the additional sales growth the publishers will achieve on the print and audio editions.)

And that leads to consideration of one more distinguishing characteristic of Open Road’s approach compared to the automation-assisted methods that look like the industry standard. There is a practical limit to the number of titles any other marketing organization can execute a promotion for on any given day. That depends on the extent of their staffing and the degree to which they have streamlined their efforts, including their use of proprietary tools.

But Open Road’s system works better for every title as more and more titles are added to the system. There are more titles with metadata that stamp them as candidates for a push on any given day. Those additional titles, in turn, generate more data that makes the system do a better job of picking titles for the opportunities they see going forward. As titles get added to the universe, the number of moves grow at pretty much the same pace.

It looks from here like Open Road’s automated marketing is a killer app. It is the result of tens of millions of dollars of technology investment and more than a decade of constant daily adjustments and improvements by an integrated team of software engineers, data scientists and marketing analysts. Any publisher who doesn’t have comparable automation is going to find sooner or later that it makes sense to turn over the titles that their humans are unlikely ever to touch to an automated marketing system. If that’s true, we’ll soon find out whether Open Road is unique, and can remain unique, or whether they are just the first to go public with a way of working that nobody else is talking about.

Given that it was built iteratively over a decade, with additional improvements to the algorithms taking place every day, Open Road has confidence that their system would be very hard to replicate. This is reflected in their openness in exposing the details of what they do. They tell their publishers about every move they make in periodic review summaries and they are open to sharing as much detail about how their system works as a publisher wants to know. While I first learned about how intricate the system was through my association with them on other questions, they answered every question I asked when I took on trying to understand it well enough to explain it.

As I said at the top, if anybody else has comparable capabilities, I haven’t seen evidence of it. My hunch is that while a rapidly increasing number of publishers will sign up to work through Open Road’s Ignition service, some of the biggest players may want to work with Open Road to build their own customized version of Open Road’s system. It will become table stakes to be automated to that level, and as you realize how much there is to automate and how many calculations and algorithms there are to develop and monitor, it might seem attractive to pay the rent to start with somebody else’s framework. But that’s something that hasn’t happened yet. And it is also an opportunity for anybody else out there, if there is anybody else, who has comparable capabilities.

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