How the startup world is changing publishing for good

By Sam Wilks

Since the launch of the Kindle in 2007, e-books have been steadily gaining popularity and while discussions on tech and literature typically involve a debate on their ubiquity, the software world has had a much wider impact on literature than many are aware of. As an author, there are now a multitude of ways to distribute and market your book, many of which bypass the traditional publishing model in favor of one of many options that are heavily influenced by the tech world.

As a reader you can crowdfund your favourite author’s new book, read on almost any device, from the old-fashioned paper one to your iPad and buy books from a wide range of sources.

When e-books were first published, it was assumed that they would eventually replace print books all together. Instead, e-books sales have stagnated and although there is certainly still time for their popularity to increase, it looks as though the current trend will continue and their share of the market will remain at roughly 30%. It seems likely, then, that the largest effect technology has on the book industry will not, as many assumed (and feared), be to supplant the paper book.

So what will the current startup boom change in the publishing industry? The principal change that software is likely to have on literature is to inject West Coast tech industry ideals into the way that books are published and distributed. This is similar to the way that other artistic industries were disrupted. Netflix, for example, redefined the distribution of television and movies and iTunes did the same thing for music.

If you want to talk about the business of books and tech Amazon will inevitably dominate the conversation. They have had by far the largest impact on publishing of any single entity over the last twenty years. When Amazon first entered the market, it represented a refreshing departure from the brick-and-mortar goliaths that were plaguing publishers.

It was also an attractive tool to build sales. All of a sudden they had a retailer that was incredibly efficient, could provide them with data on their readers that had previously been unavailable and at the time Amazon placed a lot of emphasis on hiring good editorial staff, making it feel a lot like an indie bookstore. Even though e-books wouldn’t become popular for another ten years, Amazon’s brand of online retailing – using complex software to manage a hyper-efficient distribution system – changed the book industry irrevocably.

Over the next 15 years Amazon’s reputation shifted from popular to abusive. The Seattle based tech giant forced down prices, negotiated increasingly steep cooperative (prominent placement and promotional) fees and fired most of their editorial staff, preferring recommendation engines to expert opinions. Amazon became a bully but had become such a major market presence that they were forced to work together.

This complex relationship preceded the rise of e-book markets by years but has arguably had a much larger effect on the publishing industry. By leveraging the full extent of its negotiating power, Amazon has been able to set terms with publishers for over a decade. Nonetheless, the rapid rise and maturation of e-books has also changed the industry drastically.

While e-books were around a long time before 2007 (the first electronic book was created in 1971 when the Declaration of Independence was digitized), they didn’t become popular until the Kindle was released. The impact of Amazon’s device (and subsequent versions) on e-books was massive; the market grew exponentially, representing just 1% of publisher revenue in 2008 and around 23% by 2011.

As one might expect given Amazon’s rocky (at best) relationship with publishers, the release of the Kindle brought with it new conflicts between the two parties. When Amazon first began selling e-books they tried to price them with the same model Apple had used with iTunes, selling bestsellers and new books at a flat price of $9.99. This was far too low for many publishers: selling books at a fixed price seriously degrades their value and undermines factors such as quality and length. In response, publishers looked around for a competitor to Amazon and found Apple, with whom they negotiated a better pricing deal. With that leverage they were able to force Amazon to raise the price of their books (this issue is actually quite a bit more complicated: Amazon then sued the publishers and Apple for price colluding and won, but they were never able to return to their old model). Had Amazon’s policy continued it would have been very detrimental to both publishers and authors. The effect of Apples entrance into the e-book market, along with Barnes and Noble, was to bring Amazon’s share of US e-books down to 65% today from around 90% in early 2010.

The net effect of all of this turbulence is that today, authors and publishers don’t really care if you buy their book electronically or physically. In fact, in many cases they prefer you buy e-books, mainly because it seems that people buy more of them. The market has segmented; e-books are popular because they are incredibly easy to buy, are wonderfully portable, and are better suited to certain genres. Paper books, however, are much better for relaxing on your couch, reading nonfiction, or creating a library.

The e-book format did not become the massively disruptive force that it was originally predicted to be. However, it did open the door for new business models that have already begun to affect the industry.

One of the larger shifts that e-books are responsible for is the increasing prominence of self-publishing, a shift that would have been impossible without the digitization of content. The self publishing model varies slightly depending on the platform, but in all cases authors upload their books to the publisher or distributor’s website to have it published on one or more online store. While most services offer exclusively electronic publishing there are also physical book self-publishing services such as Amazon’s Createspace.

How practical is self-publishing as a way for writers to make a living? The vast majority of self-published books will never sell enough to financially support the author (nearly half of all self-published authors make less than five hundred a year), but that doesn’t mean that it doesn’t have viability. A recent Author Earnings Report found that self-published writers are collectively earning 40% of the total income earned by authors from e-books sales. Self-publishing success stories litter the blogosphere and many writers have attained commercial viability.

This is partly because already established authors have begun to experiment with self publishing and also because there are so many books each year that are rejected by publishers that statistically some must be viable commercially, just don’t make sense in the traditional publishing model. Because self-published authors make anywhere from 65-85% of each book sale, as opposed to 8-15% in the traditional model, and don’t have to compete for shelf space, with effective marketing and a little luck these books can carve out a niche. A selection of books have gone further and become best sellers, but these are few and far between.

Despite regaling tales of writers finding success, there is an enormous quantity of terrible work in self-publishing, in fact, the vast majority of it falls into this category. Authors, publishers and editors often view self-publishing as disrespectful to the artistic merit and professionalism of their work; collaboration with editors and professional publishing staff produces significantly better books. The copy you buy in a bookstore is almost always vastly different from the original manuscript; editors and authors work together to improve the book as it’s being written.

Traditional publishing also gives readers the confidence that experts and professionals have properly vetted what they’re reading. In addition, traditional publishers are able to financially support their writers, both in the form of advances and with the marketing and promotion required to properly sell and distribute a book. In self-publishing all of the expenses fall on the writer, creating a significant financial risk on top of the already huge opportunity cost of writing a book without an advance.

While the curation of artistic and professional works is undoubtedly a good thing, ask any self-publishing advocate and they will emphatically describe how the removal of traditional publishers has allowed artists to take bigger risks, push their creative boundaries and ultimately created a much wider range of content. This content is then reviewed by the general reading public in what is essentially a crowdsourced editorial model.

In other words, the role of deciding which books see the light of day is shifted from of a small number experts in publishing houses to the general reading public. This idea is borrowed directly from the tech industry. It adheres to many of the libertarian-style tendencies that Silicon Valley frequently exhibits and is also wonderfully entrepreneurial. However, there are number of disadvantages of applying it to literature. In addition to the general de-professionalization of the review process, it is nearly impossible to differentiate unbiased from biased opinions, many reviews are based on factors such as price instead of content and importantly, opinions on books vary far too drastically to use the same model as Yelp.

In addition to self-publishing, the literature industry has adopted the crowdfunding model to alleviate at least part of the financial stress that comes from writing a book. There are a few prominent companies offering crowdfunding for literary projects, some have origins in tech and some in books, but the processes they employ are fairly similar. The two most prominent ones are Kickstarter, which is a general crowdfunding website, and Unbound a crowdfunding and publishing house in one that is literature-only.

Although the specifics differ slightly between companies, the general model is an author posts an idea for a book on the site, readers contribute various amounts in exchange for books and extras and the author writes the book. This model has many of the same benefits as self-publishing as it takes away control from publishers and puts into the hands of readers.

Self-publishing and crowdfunding can paint an idealistic portrait of the future of publishing. Books are written by authors with full creative control, funded by readers with a pre-existing interest and distributed online with the majority of profits pocketed by the artist. While this view may be appealing, the traditional publishing model has numerous advantages and has seen the book industry through hundreds of years of success. These models don’t have to be mutually exclusive; there is room in the multi-billion dollar book industry for both.

Like every other industry in the world, publishing is already segmented and these two models each have distinct advantages. Let self-publishing and crowdfunding be an avenue for new writers to get discovered and for already established writers to experiment. The effect of the increased prominence of self-publishing could very well be to force big-name publishers who have grown sluggish and in some cases even elitist to start funding riskier projects. Existing publishers should continue to output the fantastic range of professionally written and edited books they currently do. Editors, professional critics and publishing houses should not be dismissed as old-world ideas but should rather find a way to co-exist with these new models which allow mid-list titles to flourish. The end result could be a much richer literary ecosystem.

In the vernacular of the West Coast tech industry, traditional reading has been disrupted by a combination of new business models and new technology. Amazon began what has been an increasingly complex and multi-faceted relationship between the tech and literature industries. Silicon Valley ideals and philosophy have often clashed with those of the literary world, but more recently the two industries have begun to find ways to benefit from each other. The world of books is still moving forward and most indicators imply that the environment has begun to stabilize. There is still a long way to go, however, before the industry fully recovers, and when it does it will likely look very different than it does now.

3 thoughts on “How the startup world is changing publishing for good

  1. At the end of the day, I am more interested in the work itself, rather than who published it or what platform it was published on. I’m a writer myself my focus is on the reading material thereof,

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