Welcome to the [New] World of Publishing
Welcome to the weekly newsletter that goes behind the scenes of building the first direct to consumer publishing company that brings shared experiences to reading. Peeling back the layers of this industry has been fascinating, and having the freedom to build a brand new type of publishing company is exhilarating. I’m excited to share the process with you.
I’ve been an avid reader and writer my entire life, but I built a career in launching and scaling $1B+ disruptive consumer brands. It was my professional upbringing in an environment that ruthlessly prioritized the end customer that led me to start a new publishing company: while disruptor brands had revolutionized the way glasses, skincare, razors, kitchen supplies, tampons, and underwear were sold, no one had touched publishing.
If you’ve spent any time at all in a bookstore, I think you’ll know what I mean when I say it feels like a Cheesecake Factory menu. Overwhelming, too many options and too little curation, and you either buy things you may not like or you walk out with nothing. There is no prioritization of the customer experience in these environments. If you’ve ever read a book, you’ll also likely agree that it’s a lonely experience. You read alone and once you’re finished with the book, you process it alone. No wonder you’d rather Netflix & chill or go to the movies with a friend.
But…it doesn’t have to be this way. There is a world in which you, as a reader, can actually have an extremely positive experience—from the way books are curated exactly to your taste, lessening the burden of discovery, to participating in shared experiences with others who are reading the exact same book at the same time. It’s just that the traditional publishing business model isn’t designed for this.
So, how does the industry work? Thanks to reading countless books and spending many, many hours with advisors in the publishing world, I now understand why things are the way they are. First, you have to understand the landscape of publishing: most publishers are owned by mega media conglomerates (Simon & Schuster is owned by Paramount, though Penguin Randomhouse made a bid for it, Penguin Randomhouse is owned by Bertelsmann, Macmillan is owned by Holtzbrinck Publishing Group, HarperCollins is owned by NewsCorp…). And they are bought and sold on a pretty regular basis; additionally, the Big 5 are constantly acquiring smaller indie imprints. A former head of an imprint told me that publishing is the one and only truly stable media business—unlike newspapers, magazines, and other forms of media, publishing hasn’t been subject to trends. E-readers were introduced, but the vast majority (70%+) of books bought are still print books. People’s attention spans have gotten shorter, video content is on the rise (Gen Zers watch 7.2 hours of video content per day) but they still love the tactile, luxurious experience of reading a physical book. So acquiring companies know that publishing imprints are a safe bet. The downside of this is that publishers are expected to remain safe. The other media properties (streaming platforms, digital content, video content) are all gambles, and are given the freedom to experiment in order to achieve the highest growth possible. Publishing is not given that freedom. They are the “bonds” of the giant corporate owners: reliable, not sexy. Needless to say, growth and innovation aren’t priorities.
The major imprints publish thousands of books per year, with the understanding that only a small percent of those titles will actually make money; those moneymakers will carry the profits for the year. It has always been this way, and the formula continues to “work”. Publishing is a business of pennies, with razor thin margins thanks to all of the people involved in the process. A quick 101 of how it works: an author writes a book or a proposal, finds representation through an agent, agent shops the book around to publishers, publishers bid on the book in the form of an advance, the publisher does everything to bring the book to market (editing, designing, writing summaries, soliciting reviews, securing orders from retailers), and then hands the book over to a distributor. The distributor distributes to wholesalers, the wholesalers sell to retailers, retailers sell to the readers. All of these players take a piece of a relatively small (let’s say $25) pie. Publishers are left with tiny margins, which go on to fund the tiny employee salaries, the tiny author royalties, and the almost non-existent marketing budgets.
Now we know that the publishers have a hard time making money, but what about the authors? Do they end up the winners in this game? Hardly. A first time author will get paid a very small advance, and then they usually only receive 10% of the royalties on net revenue from the book sales. The initial royalties go towards paying back the advance, once the advance is recovered the authors will start receiving royalty checks. I know a NYT bestselling author whose book came out in 2018 and is still in the top 1% of books on Amazon, but he hasn’t seen a single royalty check yet. What the publishers also won’t tell the authors is that they’ll receive almost no marketing or publicity support if they’re an unknown, first-time author. The books that receive the most marketing support are those with the biggest advances, as the publisher needs to make back the advance. The authors who get the biggest advances are those who have published bestsellers before, or are celebrities in some way. This cycle continues to feed itself, and burgeoning authors who don’t have 5M+ followers on social media are left selling fewer than 2,000 copies of their book. A book that they likely spent 18-24 months writing and editing. So, no, the authors aren’t happy either.
I’m looking at this and thinking, here’s an industry built on prestige and elitism and it’s not making anyone happy. Publishers don’t really think about their readers, and why would they? It’s a B2B business, selling into retailers. Publishers claim they’re author-centric but their business model is not set up to truly support authors from a compensation and marketing perspective. So we’ve got imprints that can barely turn a profit, authors who receive a 10% cut on their own creative work and are left in the dark when it comes to bringing attention to this work, and readers who can’t figure out what to read next and once they do choose a book, they have a lonely reading experience.
I know there are far more complexities to this industry than I’ve mentioned here. I know that indie presses work differently than big 5 publishing, I know that some authors have had positive experiences, and I know that some publishers are trying to do things differently. For the sake of your attention span, I chose to generalize.
And, by the way, I love publishing and publishers and I’m eternally grateful for their existence, as I’ve consistently read 50+ books per year for the last 20 years. I don’t fault them for how they operate, that’s the point—they’re hamstrung by the way the industry has evolved, and they do what they need to do in order to survive. I’m simply suggesting that playing by a different set of rules may usher in a new age of publishing, one where everyone wins. Let’s see.
Next week I’ll dig into the journey of building Parea, and creating a business model that benefits the authors, readers, and the publisher’s bottom line.