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RansomStephens FutureOfPublishing

RansomStephens FutureOfPublishing

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Published by Ransom Stephens
Predictions on the Future of Publishing from an internet pioneer.
Predictions on the Future of Publishing from an internet pioneer.

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Published by: Ransom Stephens on Jul 10, 2009
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01/11/2012

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ransom@ransomstephens.comwww.ransomstephens.com The Future of PublishingBy Ransom Stephens, Ph.D.Copyright 2009Is the book dead? Can the Six Sisters of publishing rescue books? Will publishers find a new profit model? Can bookstores survive the internet? Can writers make a living? What about e- books? Is Kindle the beginning and end of the revolution? Will Google Books be literature’ssavior or executioner? Where does Scribd.com fit in?Though the role of publishing has not changed – connect readers to writers – the revolutionwill not be led by an established publisher.To date, no established player has prospered through, much less led, the transition to thedigitally-based economy. What’s left of the recording industry is still pursuing the fascinatinghow-to-best-prosecute-our-customers business model. No one was better positioned to profitfrom the web-based economy than Sears, with its legendary catalog, but Amazon all but killed it.Even IBM barely survived the computer revolution.For some reason, even when entrenched companies can see the iceberg they can’t turn theship. In 2000, at the height of the “Napster Crisis,” Time-Warner/AOL’s CEO, Richard Parsonssaid, “It’s an assault on everything that constitutes cultural expression of our society… And thecorporations won’t be the only ones hurt. Artists will have no incentive to create. Worst-casescenario: the country will end up in a sort of Cultural Dark Age.”Have YouTube, Facebook, iTunes, Blogspot, et al reduced cultural expression?Here’s a better example. In 1977, Ken Olson, President of Digital Equipment Corporation
 
Stephens/
 Future of Publishing 
2(DEC) which, at the time, built the best computing hardware, said, “There is no need for anyindividual to have a computer in their home.”Time-Warner/AOL, Sears and IBM survived, but are swimming in the wake of Dell,Google, Amazon, etc.Three mistakes will plague the six huge publishing conglomerates, a.k.a., the Six Sisters:first, their blockbuster profit model is unsustainable; second, they’re not capable of marketingthose titles that are in the market segment with the greatest profit potential; and, third, they’vestopped nurturing the majority of their talent with the editorial and promotional nutritionnecessary for them to blossom into bestselling authors, the so-called mid-list authors whose earlyefforts showed enough promise to be published, but didn’t return a profit. It looks a lot like whatsickened Time-Warner/AOL, Sears and IBM and killed DEC.Publishers’ role as the gatekeepers of quality has always been dubious. Do book buyers have brand loyalty? Do you check the publisher before buying a book? Once we jump the low hurdleof spelling, grammar and minimal storytelling skill, literary merit is nearly as subjective as your favorite color. If it were objectively quantifiable, literary merit would measure profit potential(though one cynically suspects that merit and profit might exhibit an inverse relationship). In aworld where musicians can sell their best songs on iTunes, the only thing maintaining publishing’s quality-control role is the carefully manicured perception that self-publishing isanathema to aspiring professional authors.The publishing company that turns the corner, leaving the Six Sisters in the dust, will leavewill leave quality control to authors – even grammar and spelling.The obvious candidates include Yahoo and Amazon, but I think they are already too big andstodgy to make the move; Google has everything necessary on its place, but might be toofragmented to make the move; the big self-publishing companies Lulu and iUniverse are wellCopyright 2009 Ransom Stephens, Ph.D.
 
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 Future of Publishing 
3 positioned but might be too burdened by the “vanity press” label to emerge. Right now, I think the smart money is on Scribd.com. Anyway, for the sake of argument, let’s call the emergingcompany NetBoox.The biggest change in the terrain is that NetBoox will be able to “stock” every title not justonline, but in every bookstore. Currently, the biggest bookstores hold well under 100,000 titles.The basis for their profit-model is the assumption that the fraction of stocked titles covers 80% of demand. In other words, they’ve been operating under the assumption that 20% of available titlesaccounts for 80% of 
realizable
(as opposed to
realized 
) profits. The 80/20 rule embodied: 80%of the results come from 20% of the work.It turns out that the 80/20 rule is wrong. It’s more of a 40/20 game. This is the lesson of longtail economics.Long tail economics is straightforward: First, assemble every title, not just those in or out of  print, but those that could be in print,
every
 possible title; second, organize the titles indecreasing order of demand; and, third, plot the number of copies that could be sold if everyonewas aware of them, i.e., the potential demand. The result is the graph shown inFigure 1. Gimme bestsellers, like Patterson and King titles, are on the far left, mid-list titles in the center-left andlow-volume sellers, niche books, on the right.To figure out how NetBoox will operate, consider the extremes. The Six Sisters concentratetheir marketing prowess on squeezing as much money as possible from bestsellers, the darkened20% of titles/40% of demand on the left – the so-called blockbuster strategy.Stephen King can write a book, punt it over to Lulu, put a note on his web page and it willsell. Bookstores will order it, people will buy it in both electronic and bound form, and StephenKing will earn about twice the royalties he would from a conventional publisher. The loss of their golden-egg laying geese is the first huge profit-problem established publishers will face.Copyright 2009 Ransom Stephens, Ph.D.

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