Business or Casino? Is Publishing Really a Crapshoot?

Interesting piece in yesterday's NYTimes (H/T: AT) about what goes into making a best-seller. Answer: nobody really knows. Whether they could if they thought harder about the problem is the question the article takes on.

Eric Simonoff, a literary agent at Janklow & Nesbit Associates, said that whenever he discusses the book industry with people in other industries, “they’re stunned because it’s so unpredictable, because the profit margins are so small, the cycles are so incredibly long, and because of the almost total lack of market research.”...

Calculating the advance accurately would be a prized skill, but no editors claim to have a scientific handle on how a book will sell. Instead, they emphasize the role of intuition and say that while big unexpected losses and gains do happen, somehow it all works out...

Individuals quoted in the article make comparisons between the industry's methods, gambling and lightning strikes, noting that the fundamental business model of the book publishing industry hasn't changed in centuries.

The comparison to gambling probably isn't accurate unless they're referring to the gamblers themselves--and casual ones at that. The casino industry not only knows a tremendous amount about its customers (especially the best ones) but also employs some of the most sophisticated methods known for staying in touch with them and catering to their needs. Here's the "well duh" quote:

Some experts wonder if book publishers might uncover more [winners] if they tried harder to find out more about their buyers and what they want.

The question, of course, is how. For some types of books (and authors) prediction markets might be appropriate. I'm also thinking conjoint analysis... or some combination of the two.

“The Newspaper Association of America has a staggering amount of data on people who read newspapers. The book business has, basically, nothing,” said [Al Greco, a professor of marketing at Fordham University]. “They’re not going into the marketplace and doing mall intercepts and asking people, as they leave the bookstore, ‘What did you buy? Did you find what you’re looking for? What motivated you to choose that book?’ ”

... Most publishers... continue to gather data on sales and not much else, though past performance is certainly no guarantee of future results, even from the same author.

One thing conspicuously absent from the piece is any mention of Amazon. The entire thing appears to have been researched by talking to publishers, editors and academics. I.e., a story requiring only subway fare.

Methinks that had someone from the New York Times bothered buying a plane ticket to Seattle to talk to Jeff Bezos they might have had a different take. Amazon's suggestions for me can sometimes be bizarre, but over time, they've gotten better and better. I can't help but imagine that they work as well in reverse: predicting the type of book--if not the specific title--I might buy more of.

And there's the rub, isn't it? Predicting in absolute terms the success or failure of tens of thousands of different items is a far far more difficult task than predicting (say) the success of one among a dozen brands of paper towels.

Comments

[Frank]

Food. Publishers need to follow the methodology laid-down by the food industry--focus groups and test markets. First, though, authors, publishers, and booksellers must come to grips with the book business being just that: a buisness.

[Erik Sherman]

The problem isn't that publishers are gamblers. It's that they're so befuddled and stuck in what they've always done in the past that they don't take advantage of what could make their businesses more efficient. Here's an actual example of a business process at a major publisher that I saw as the person waiting for a check based on a writing milestone. I finish the milestone. The developmental editor tells the acquisitions editor. The acquisition editor tells the contracts department. The New York contracts department sends a payment request to Indiana, which then sends it back to New York - which send it down to accounting (all of this on paper, mind you) in New Jersey, which then cuts a check and sends it to ... New York. Where they then send it to an agent I used on a previous book but not this one.

This isn't gambling. It's being befuddled and inept. Also, I think that the publishers do know how much information some of the resellers have, but I think the sellers don't share the information. After all, why should they? The resellers order from publishers with a six month return policy. Often they will return books only to order them again, essentially keeping them on perpetual consignment. So knowing what is going on is pretty difficult for the publishers. And the publishers are now too beholding to a few powerhouses. It's like trying to deal with Wal-Mart - few companies have much if any leverage.

[Art Hutchinson]

The 'befuddlement' theory is hard to deny.

About ten years ago, I consulted to a major NYC book publisher on digital rights management. Ostensibly, the project was about deciding on a digital rights strategy, developing an information architecture to support it and selecting a technology solution to make it all work.

Problem was (we learned... after interviewing several of their execs), their existing method for managing rights, royalty payments, etc. was haphazard at best. It basically amounted to: if the author is a bigwig and we might get caught, then pay close attention and figure it out on a case-by-case basis; but otherwise, don't worry about it.

Moving to 3X5 cards and filing cabinets would have been a major improvement for them. I was shocked. Their potential legal liability was incalculable while their lost revenue opportunities were equally large. And this was a major 'name' publisher.

[Bob Weber]

Book publishing is not the only "blockbuster" industry. Movies and Music are very similar. All share the characteristic that the profits from a few blockbusters usually make up for the losses on a majority of titles. I do not believe that rationality -- market surveys, etc. -- will change these businesses very much since with a few notable exceptions, they are subject to the vagaries of evolving taste and word of mouth.