Mike Shatzkin asks: what can publishers offer in digital publishing? A response.

Mike Shatzkin has just posted an excellent new article: "Will book publishers be able to retain primacy as ebook publishers?" Some snippets:  

"... I think we’re going to see a US market that is 80% digital for narrative text reading in the pretty near future: could be as soon as two years from now but almost certainly within five ...

... Now here’s a fact which is documentable, and would be documented right here on a day when time wasn’t in such short supply: brands that are not publishing houses are directly publishing their own ebooks with increasing frequency. Magazines and television networks and web sites are recognizing the reality that self-publishing ebooks is something they can do themselves without the complications (or revenue-sharing) that working with a publisher would require.

This is not a surprise to me, but it does really raise a point that major publishers have to consider: can book publishers add enough value to the ebook publishing process to persuade another brand with content credibility, one that has direct contact with the vertical community that is the audience for their books, to do their ebooks through the publisher rather than directly?

This is an existential question for big trade publishers ...

... Which leads to the conversation I had this past week with the marketing VP ... I raised the question: “will publishers be able to persuade these non-publisher brands that it is worth giving up margin and some control to work with publishers in the years to come?”

“That’s a very tall order,” he said ...

... Developing skills and capabilities that make their ebook-publishing ability superior to vertical brands is going to be essential for publishers’ survival as the skills and capabilities to do print publishing become less important commercially over time, as they will ..."

 

I think this is a vital question - maybe THE question, for publishers, for writers and other content producers, for literary agents - for the entire publishing infrastructure.

 

What can the publisher offer that the content producer cannot do? Or cannot easily outsource for very limited one time fees, rather than for a percentage?


Because if the answer turns out to be "nothing", then those literary agents you mentioned who are "lining up to offer the tools" are as dead in the water as anyone else. RCP won't start offering to publish ebooks, because nobody will buy their services. They'll all be doing their own.


I see a very slim set of roads publishers could take to recover in digital publishing the level of importance they had in print.


1) Brand themselves. In fiction today, for example, most readers do not recall the publisher of the last book they read; however, almost all recall the author's name. In fiction, authors are very heavily branded, where most of the time publishers are not. Some publishers (much more in nonfiction than in fiction) do have powerful brands, and building more reader recognition into those brands could give publishers something strong to offer. If readers were as interested in buying the next Ace book as they were in buying the next Nora Roberts book, then the Ace name would have a powerful brand worth a percentage of the income.


2) Market superbly to readers. Under print, publishers were often more concerned about marketing to bookstores than they were about marketing to readers. Get the chains to buy a book, and generally readers would follow, and books would sell. Not quite that simple, I know. ;)  Under digital, though, the reader is paramount. The publisher needs to be able to market books to the reader. And not just some books, but every book they produce. If publishers can prove to content producers that they can double their income compared to what they can make alone, then publishers can retain the services of those content producers at a 50% net royalty. To retain a 25% royalty, publishers will have to prove they can earn content producers four times as much as they could earn alone. Right now, that does not seem to be happening reliably, if one looks at ebooks alone. Making that transition will require a lot of reshaping of how publishers think.


3) Increase royalty rates. I think this is inevitable, and hinted at it in the paragraph above. Many publishers are offering 25% net contracts for digital books right now. However, many smaller presses are already offering 50%. Some have moved to as high as 70% net. A 70% net contract isn't as high as the 70% of gross a content producer earns when going direct to retailers, but it IS probably high enough that, if combined with excellent services and marketing, writers could be convinced that working with publishers is a good deal.


4) Contracts need to be improved. Thanks to several well known blogs, writers are becoming increasingly aware that many publishers are offering poor contracts these days. In some cases, publishers are trying to unilaterally rewrite contracts without author consent. These practices are forcing writers away from publishers, and creating a feeling of conflict and antagonism, rather than a sense of cooperation for mutual benefit.


5) Respect. Publishers as a whole need to recognize that the game has changed. Digital books allow content producers to much more easily go direct to consumers. The day when publishers were the gatekeeper through whom all content needed to pass is done. Content producers have options, today. A submission which is rejected will still most likely be a competitor on the marketplace soon after. In the future, the relationship between content providers and publishers will be much more of a partnership than it was in the past.


6) Scale down operations and scale back expenses. Even with all the above changes, publishers will be operating on slimmer margins and smaller sales numbers than they were in the pre-digital world. More precisely, publishers will need to drop as much of the expense of physical infrastructure as is possible. Digital media requires little physical infrastructure. Digital communications no longer requires a central office at an expensive location.


It's a lot to do. And there's no longer a lot of time. Within three years, I think, all of this will have settled out and we'll be able to pick out the winners who survived, and the losers, who didn't. Mike is right - this is absolutely an existential question.