The Civil War for Books: Where's the Money Going?
by our guest contributor Philip Gwyn Jones
Over the course of the last few years, it has come to feel that we bookish types are stuck in our very own World War One re-enactment, in trench warfare over where the money lines are drawn. The skirmishes in the global book industry are internecine and unrelenting: the independent authors bombard the traditional publishers; the traditional authors bombard the literary festival directors; the traditional publishers bombard the retailers; academics denounce those who would defend copyright as traitors to the public good; and the retailers take the publishers to courts martial. With the new armaments of disruption and disintermediation whirring nicely, the ‘creative destruction’ of techno-capitalism is at full tilt in the business of writing. But who will taste defeat first? Will it be the publishers? Or the booksellers? Agents? Or, dread thought, might it be the writers? Mounted on my high horse, surveying the scene, I fear it is another regiment on this clamorous battlefield which is most in peril. The Readers.
How can that be? The Reader has never had it so good. In the UK, the Reader has enjoyed a decade of improved access to ever cheaper books, more efficiently distributed and more elegantly designed than before. Entering the doors of one of our grander old-world bookshops, a handsome branch of Waterstones or the glorious new flagship Foyles or Blackwell’s in Edinburgh or Oxford, and surveying the lustrous array of beautifully packaged new titles, it would take a positively curmudgeonly, perverse book-lover not to bask on those sunlit uplands of choice and simply be thrilled to be alive at such a moment in British bookselling history. I am of course that pervert. Yes, I too have been lifted aloft by the sense that We Readers have never had it so good – that the profusion and the excellence and the value before us is unprecedented. And yet I find myself bumping back down to earth all too often. As with raising children, where every moment of joy has an elegiac cloud shadowing it – oh, this is a wondrous moment, but, lo, it is already passing – so it feels that we are at the apex of British bookselling, and the only way now is Down.
Books are like stars. By the time they reach the New Titles shelves, their birth is a fact of the distant past. The books displayed at the front of today’s bookshop were created, contractually or cosmologically, in a big bang of acquisition two, three, ten years prior. So, there is something of an optical lag in place – in the space and time in between, there have been some interesting developments in the business. Yes there are still occasional new shooting stars, lighting up the firmament all of a sudden, a Jessie Burton or a Paula Hawkins, as there have always been. But increasingly rather large patches of the galaxy have gone black. Now, this is where the amateur publishing astronomer can only be speculative: deciding that something might have existed that isn’t readily apparent is mind-twisting work. And it’s hard to offer up the hard stones of evidence. But as a commissioning editor and publisher of some 25 years standing, I hope I have some authority to make the claim that certain stars are missing. They are just not being born. It seems to me that there is a universe of self-censorship out there, even if it is invisible to the naked eye. We’ve had perhaps five years now of good writers taking their next ambitious project to their agent who in turn excitably puts it in front of publishers only to be told that it’s perhaps a little too bold an idea for these austere and shape-shifting times, and might there not be a more reader-friendly project up the writer’s sleeve? The agent sheepishly reports this back to their beloved writer, who then either conforms to the market’s demands or slopes away to nurse their wounded ego, and think hard about the purposes and pleasures of writing. The next time that writer comes up with a bold, unorthodox, unprecedented notion for a book, what happens? Well, perhaps, just perhaps, they decide before they start in earnest that it’s a no-hoper and they ought to play safe, so they bin it without telling anyone. And another bright star never shines.
A big change in how The Reader finds their next book to read only exacerbates this development, even if it is not the primordial cause. Readers have always valued personal recommendation. Every book market research survey ever done has told us this. This is why the best bookstores always, in the end, return to the power of their booksellers’ advocacy – those bays festooned with Tim’s Reading Tips or Chloe’s Kids’ Books to Cherish. Now that two out of every three books in the UK are not bought at a till in a bookshop, it is how books rise to visibility online that matters. Metadata-driven discoverability, to use the jargon, is the key to modern book-buying. Online, if you are looking for a book about German grammar or Cantonese cookery or Filipino forestry, algorithms will lead you by the hand to your rightful destination in a nanosecond. If, however, you are just idly looking for your next novel to read, open to suggestion, then it is stumbling across a plausible recommendation that is crucial. And that works online in a very different way from Tim and Chloe’s methods of diffidently but passionately – and above all personally – persuading you to read this not that while you chat at the till with them. The happy few self-published authors who are making good money by skillfully and incessantly promoting their works online have long ago realized that generating talk around a book can be almost infinitely amplified in cyberspace to lucrative effect. Social reading is the coming thing, we are told, where our reading devices and apps will allow us to communicate with others who are reading the same book we are, share notes and queries with them, correct and conject, exult and excoriate together as if we online readers were round a digital dining table, and even involve the writer in that conversation if they are willing. But for such Social Reading to work, everyone has to be reading the same thing, so it tends to favour the popular, the shared, the already-known. Hence the ubiquity of Most Read and Most Liked lists. There is a lot of barked coercion out there in cyberspace. So the online sharing book economy will coalesce around, well, winners. But what happens to the losers: the unshared, the jagged, inimitable, harder-to-chat books? Lest I sound altogether too tweedy, I ought quickly to align myself with techno-utopian Clay Shirky, the Voltaire of the ebook revolution, who says ‘While I disapprove of what other people read, I will defend to the death their right to read it.’ I second that emotion. However, selfish reader that I am, it’s the kind of books I like to read most that I’m most worried about. Their authors are increasingly hard-up, feel unloved and unrewarded, and some of my acquaintance are even turning away from writing books altogether. ‘But, twas ever thus’, you cry. And you are of course at least half-right.
Many of the greatest writers struggled to earn enough in their lifetime; they had to do non-literary work to survive, or lean on others, or come into family wealth. It’s worth saying for the avoidance of a false historicity that writers have always been hovering at the threshold, cap in hand. And also that it can be in the tension between the contradictory urges to unleash creativity and to make money that culture is made.
But the facts are that, as of last summer, according to the most comprehensive survey we have of British professional writers, conducted once a decade by the Authors' Licensing and Collecting Society, less than 12% of British writers were able to earn a living wage from writing alone, down from 40% of those surveyed in 2005. Moreover, the median income of a professional writer in the UK has fallen to just £11K p.a. So, it’s fair to say it’s not the long-serving professional writer who is making all the headway in the struggle for economic security in the book industry. For many of them, with book contracts halving in average value over the last ten years, journalism tending to be unpaid, and no rise in state or philanthropic support for the literary arts in the UK, it is to teaching, and specifically the teaching of creative writing, that so many have turned for essential income to pay for their food, energy and shelter. They teach in order to write but often find teaching impedes their writing. And even with teaching income, very few are making significant sums of money.
So let’s look elsewhere for the cash, and get back to the ‘hysterical narcissists’ as good old Clay Shirky calls them: the big traditional corporate publishing houses. Last month, Hachette’s parent Lagardère announced its financials for 2014, a year during which their key US division had been at loggerheads for months with its biggest customer, Amazon, and that customer had strategically impeded Hachette’s sales by altering discounts and availability onsite. So, revenues were down a little on the previous year’s as were net profits, but those profits, at €197 million, remained a good sharp 10% of their overall publishing revenues of €2.04 billion. Meanwhile, the newlyweds at Penguin Random House managed to make profits of €363million, a margin of 13% in 2014, their first year under the marital roof. HarperCollins managed an identical profit margin in their 2014 accounts, and Simon & Schuster managed, yes, 13%. Spooky. When I was growing up as an editor in trade publishing, a house was perceived to have done exceptionally well if it made double-digit profitability in a given year. The biggest houses seem to have secured that golden performance year in year out of late. For the time being at least.
Because of course this newer profitability is entirely underpinned by two key shifts: the higher profit margins on ebook sales over print book sales, which is in turn founded on the prevailing orthodox royalty rate of 25% of net receipts for authors on ebooks; and the immense profitability of their Amazon account – Amazon having eliminated returns and vastly reduced the cost of servicing that account for printed books and quite simply having created a whole new efficient book market – for ebooks – from scratch. So there's plenty of money to be made in corporate publishing at present. But how much longer the corporates can hold that 25% royalty line against the battering of the big guns of literary agenting is a major tactical question in the civil war for books. Likewise, Amazon’s repeated raids on publishers’ discounts, which see them attempting to seize ever more of the publishers’ most profitable territory, aren’t likely to cease anytime soon. Meanwhile, in another corner of the battlefield, that same large standing army lashes at itself with mace and broadsword, in order to avoid becoming profitable.
It is one of the great mysteries of technocapitalism. Amazon, that most gnomic, inaccessible, efficient and omni-competent of businesses, the Wizard of Oz of the retail world, has for twenty years made very little money, in the specific sense that it makes proportionately tiny profits. And yet it is adored by Wall Street and the post-bubble new tech evangelists in the world of finance. It is not an old business, but it has been with us now for over two decades, and can just about be counted as mature on most peoples’ scales. So it is surprising that over the last five years, according to the figures on Reuters Markets database, despite in each of those years producing worldwide revenues in excess of US$30 billion p.a., rising most recently to US$88 billion, i.e. 88 thousand million dollars (always worth spinning that out, I find), its average annual profit margin across the period 2009—2014 is a whopping 0.64%. Less than 1%. Now admittedly that is less than 1% of a very large sum, so it’s still in absolute terms a handsome stack of cash. But it is not the kind of ratio that the Stock Exchange normally permits to go unchallenged for so long. Unless they are convinced that far, far greater profits lie ahead, which is what some analysts evidently believe – that Amazon’s data mining of all its customers’ buying habits, movements and preferences will permit them ever-more-targeted, ever-more-seductive marketing. They will know our desires before we do. In their current position, even more perplexing to financial half-wits like me, is the fact that with each of the last five years Amazon’s overall revenues have ascended steadily as their reach and range increases, from $34bn in sales in 2010, to 48 to 61 to 74 to $89bn in 2014, while their operating profits have declined inversely steadily, from $862m in 2011 to $178m last year. Of course, if you earn less, one happy consequence is that you pay less tax – but that is a whole other conversation.
Meanwhile, back in the author’s study, the world bifurcates: there is the increasingly casino-like traditional publishing option, where the bets are big getting bigger, and the winners are big getting bigger too as are the losers. Or, for those not allowed to approach the corporates’ gaming tables, there is the option of being among the happy poor at the fringes who are just grateful to get published, thank’ee kindly guv’nor. This state of affairs of course permits, demands and accelerates the rise of crowd-funded publications and autonomous publications. So, a writer wanting to enter the fray can hire a gang of experienced mercenaries from among the vast pool of wise old former publishing professionals now swelling the ranks of the self-employed. These experts will help get an autonomous author’s typescript into its best shape. The author then puts on the self-publicist’s armour (and stays in it 24/7) and heads out to be their own battalion. Or an author can look to microsourcing, spreading the load of a publication’s start-up costs lightly across many shoulders via online crowdfunding sites, before, again, having to don the self-publicist’s armour and go into combat with rival writers for the attentions of The Reader. The swordplay starts on Twitter and Facebook, continues on GoodReads and YouTube, and climaxes on Amazon and then Google, where it will be indexed forever. It’s all about visibility, publicity, penetration, SEO. But there’s the rub, as while travelling assiduously through those six mighty digital kingdoms, the writer and their work will in passing give up for free their most precious attribute – at least as contemporary economics, and indeed The Stock Market, defines it – their metadata. And Facebook and Google and the rest will continue to slice tiny slivers of income off all those who cross their borders, while also amassing a passport profile of the passers-by that can be parceled up, sliced any which way, shuffled and sold and sold and sold again to all those who would profit from knowing consumer habits and movements. Now, the question of whether it is at all right that the data monopolist companies continue to amass ever greater wealth from their tracking of the desires and dreams of individual citizen-consumers amid the financialization of everyday life is beyond the precincts of this provocation, but how states and citizens choose to marshal or not to marshal the data companies is perhaps the second biggest issue of our time after the climate crisis. Were they cannier, the large publishing corporations would perhaps be more actively advocating that national governments and supra-national bodies like the EU intervene to protect consumers’ data or better still to give copyright control of that data back to those consumers, to The Reader. To be fair they do so in Germany and France but fall short of doing so in the Anglo-Saxon world.
For, it all comes back to copyright, who controls the right to make copies, and the tension between creator and consumer. Increasingly the work that used to be copied for a cash price, the book itself, will become less commercially valuable than the details around its sales transaction – when it was done, where it was done, amongst what other activities, alongside what other purchases. As the cost of copying approaches absolute zero in the digital space, and the belief hardens that ‘sharing’ writing on the Internet by hyperlinking is not the theft it would be deemed to be were it to take place in print, our traditional copyright payment structure will come under ever greater pressure, and Publisher and Author book revenues may suffer further. Which is why the income to be had from live events might become crucial to writers. Readers increasingly want intimacy: access to writers, online and in person. They seek proximity, to share an experience with writers, conversation, observation, questioning, at literary festivals and at the new salons like Damian Barr’s, Pin Drop, Local Transport, Intelligence Squared et al, and beyond that in other initiatives where writers sell their unique wisdom in person rather on paper, to individuals or to institutions and companies. All this unprinted activity might come to displace the income from the books themselves as the major source of revenue for writers in the future. Some would argue that such a change favours the confident self-publicist rather than the better writer per se. I believe it favours those who have something substantial to say, which is no bad thing.
Ultimately, the coming shift to Social Reading is liable to consign the traditional Publisher and many a writer to decline and defeat in the Civil War for Books... which of course saddens me. Economically it will be the Reader who is the prize, the territory to be captured, the Alsace-Lorraine or the Poland of the Civil War. Winning the Reader’s attention – and the natural monopolies of Google and Facebook will be far better at this than the publishers – then chopping that attention into tiny little morsels for never-ending re-sale and re-cycling seems, in a way that might even be beyond the imaginings of a Borges or a Ballard, likely to be the humming machinery at the heart of the twenty-first-century book business. Reader, you ain’t seen nothing yet: they will be all over your every move like a rash.
Philip Gwyn Jones is an editor, publisher, lecturer and commentator, and a Trustee of both English PEN and the Royal Literary Fund.