Alex Steer

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What's really changing in the publishing wars

793 words

I don't find the Guardian's argument that Amazon aren't destroying publishing, they're reshaping it wholly convincing. Or, rather, I think they are reshaping the industry, but not for the reasons given.

They argue that there's a power-shift happening from publishing houses to retailing gatekeepers:

So Amazon, Google and Apple are gatekeepers. They have realised that the key to profitability is not investing in risky startups, but owning the marketplace where those startups stand and (mostly) fall. So for the rest of us, outside the walls, what's the point of taking sides in a battle between "legacy" gatekeepers and new ones?

Well, yes and no. But as the article points out, there's scarcely a battle at all - except the battle that's always raged between producers and retailers. Amazon, like Apple, have switched from a 'wholesale' model of ebook retailing (where they have full control over pricing) to an 'agency' model where prices are set by the publishers. (This is explained better in this Time article.) So this scarcely counts as a disruption at all.

For me, the real disruption is the shift of the delivery technology for books, from the hands of publishers to the hands of retailers. The production of books has always lain with publishers - but now retailers (Amazon, Apple, Barnes & Noble) have control of the major ebook devices. Imagine that we only had paper books, and that suddenly it was bookshops doing the printing, not publishers, and you see what a shift that is.

This is disruptive because retailers, unlike publishers, benefit hugely from long-tail effects. As long as the production cost per unit remains low (and with ebooks, even more than paper, it does), it's in the interests of retailers to make it easy for people to produce and sell as many ebooks as possible. Even the really bad ones that only sell a handful of copies will contribute to the profit margin, because there are so many of them. By contrast, it's in a publisher's interest not to produce thousands of third-rate books, because publishers have high non-production overheads (editing, typesetting, publicity, etc.).

But why is this? It's to do with branding. Retailers are what you might call long-tail brands. As long as their catalogues are easy to search, retailers are thanked for carrying a lot of different products (paradox-of-choice arguments aside, for now). Publishers are short-tail brands: guarantors of quality who are expected not to churn out lots and lots of dross, but only to bring the best products to market. (Self-publishing firms are the exception to this rule.)

The reason retailers have invested so heavily in ebook devices is because it makes sense for them to give the many publishers of bad books a cheap and easy way to circumvent the publishing process. We sometimes call this 'democratisation', though that seems a slightly optimistic term for opening up the long-tail market and monetizing it. ('Whatever you produce, we'll try to sell' is the motto of the retailers.)

But retailers also profit hugely from the short tail - the few very good, very popular books - and these are controlled by the publishers. (This makes sense. If you write good, popular books, you want them to be well edited, well promoted, and distinguishable from all the dross on the market.) So having opened up the market to the long tail, retailers now have to make friends with the gatekeepers of the short tail too.

So it's not true that the old laws of publishing have been changed forever (they haven't), but nor is it true that this is just 'same old, same old'. Producers and retailers will always fight for share. They will have to come to a settlement: otherwise we'll see publishers being excluded from popular new platforms, or new platforms becoming less popular because they don't stock good books. This is not new - it happens everywhere from grocery stores to app stores.

What's new is the  shift in production control from publishers (paper) to retailers (devices). Publishers have let this happen; now they are clawing back some control over pricing, but only some. Retailers have annoyed publishers, and now some will suffer from being closed out of the short tail.

For me, the real disruption opportunity isn't on either side of this cat-fight, or in making unlikely claims about falling book prices. It's in helping people decide what they might enjoy reading, in a much-enlarged market where the current model - restricted supply through publishing houses, recommendations made through marketing and press reviews - is suddenly not wholly adequate.

# Alex Steer (30/04/2012)