The real threat to (big time) book publishing

The real threat to (big time) book publishing

The people who run the big publishing houses feel threatened by Amazon and by ebooks and by pricing and by the death of chain bookstores, not to mention the Justice Department.

All of these are contributors to the future, but they cloud the core issue.

The narrative of their fear is that book publishing will be just like it is now, but with lower prices and just one or two stores.

This is the classic outcome of the Innovator’s Dilemma. If you care about the strategic decisions publishers are going to have to make, this one is a must read.

Clayton famously tells the story of steel mini mills, which were disrespected producers of cheap rebar. They took scrap steel, processed it a bit and sold cheap with low margins. The integrated steel mills, justifiably proud of what they’d created and focused on increasing their profit margins, happily let the mini mills take this market. Who wants it?

You know what happened. It happens to just about every industry, from hard drives to furniture—the insurgents, coming up from the bottom of the market, had an incentive to refine their techniques, engage with their customers and innovate. The incumbents, saddled with much higher costs and less innovation, watched themselves go bankrupt, one by one.

In the book case, the disruptive innovation isn’t a huge retailer or even lower prices, the disruptive innovation is the long tail of boundless inventory. Scarcity of selection combined with scarcity due to the marginal cost of each unit have disappeared.

Every single day, hundreds of millions of people read something that the big book publishers and the big magazine publishers didn’t publish. This is astonishing–just 30 years ago, if you read something that wasn’t a newspaper, it was probably published by someone like Time Inc or Simon & Schuster. It was a scarce object, one that you paid for and probably went to a special place to get.

Today, of course, that special place is your laptop or your tablet. And you’re reading blogs (like this one) or tweets or updates or rants or pdfs or ebooks that were never vetted or curated or approved or processed by one of these legacy intermediaries.

The big guys turn up their noses at this content. They don’t give a Pulitzer for independent bloggers. The Times bestseller list tries hard not to count self-published ebooks. The discussions at industry cocktail parties have almost nothing to do with what masses of people (rebar!) are reading all day.

And now the market is moving up a notch, from blogs to ebooks. Suddenly, self-published ebooks are taking more and more time off the table, more and more money from the pockets of readers. And none of that is vetted or curated or approved or processed by one of these legacy intermediaries.

Will there be new curators? No doubt. New idea vcs who pay advances to authors with enough of a following to justify them? Yes. The question is: will it be the big companies in New York?

Instead of working hard to keep their share of a shrinking pie, or working even harder to make sure the industry stays as is, I think the most essential thing legacy book industry players can do is set up independent ventures with great people and little interference and work really hard to put themselves out of business by starting at the bottom, not by reinforcing the top.