Is Publishing Doomed? JOHN B. THOMPSON with Williams Cole

Over the last decade there has been much talk about the fracturing, transformation, implosion, and even the annihilation of the dominant paradigms in music, journalism, movie-making, and, most recently, publishing. What might have been a slow burn in a once-stable media landscape is on the verge of ashing out, as book publishing is now seen by many as the last victim of such a “crisis.” In preparing his new book Merchants of Culture (Polity Press 2010), Cambridge University professor John Thompson spent five years talking with book editors, publishers, writers, and agents on both sides of the Atlantic. Thompson’s book (which is delivered traditionally, meaning bound in cloth covers) is comprehensive and surprisingly exhaustive. Armed with research this detailed, it’s not surprising that his conclusions are significantly more complex than the prevailing idea that “e–books are killing publishing.” I sat down with him in a Gramercy Park coffee shop to discuss.

Williams Cole (Rail): So, let’s get right to dissecting the hype—how would you characterize the state of publishing right now?

John B. Thompson: It’s at a bit of a critical juncture but it’s not necessarily because of the rise of electronic books. It’s the outcome of two interwoven processes—one that is social and economic and one that is technological, each of which has its own history. On the social-economic side is a process that began in the 1960s and led to a gradual transformation in the field of trade publishing. This process was shaped by three factors: One was the growth of the retail chains and the revolution of retailing, the second was the rise of the literary agent, and the third was the consolidation of publishing houses under the umbrella of large corporations. And those three processes led to a social and economic transformation in the field of trade publishing that’s effects are felt today. That’s one development; the second is a process that began also in the 1970s and early ’80s, which is the digital revolution, a technological transformation, closely interwoven with the social and economic transformations of trade publishing but distinct from it at the same time—that process has over time gradually had a differential impact on various sectors of the creative industries, beginning with music, and television, and so on. And now, rather more recently, it’s having a big impact in the publishing industry, above all newspapers, and gradually books, as well.

Rail: So the change in publishing is certainly more complex than the chat that “e–books are destroying traditional publishing?”
Thompson: Absolutely. The publishing industry is in trouble—but not just because of the digital revolution. The real trouble for the publishing industry, in my view, has more to do with the gradual unfolding of this economic transformation that led to this structure of publishing, where we now have five large corporate groups and a small number of retail chains dominating the industry. These corporations have to achieve growth year on year, and when that top line revenue begins to fall, as it did when the 2008 economic recession suddenly tipped the narrow profit margins into the red, it has devastating impact throughout and the only way that they can preserve the profit at the bottom line is to push people out, and to reduce their overheads and costs dramatically. You don’t see this in the small houses but the big corporations respond quickly, immediately, because their absolute priority is to protect that bottom line profitability, which they have to report to their corporate bosses. And so that was the real crisis in the publishing industry in the autumn of 2008 to the present. Now, it also happened to be conjoined with an upsurge in e–book sales. Kindle had been introduced in 2007, the Sony Reader a year before that, and there was some impact from these before the recession. But as you moved into 2009, commentators and observers of the industry were seeing that the only thing that had an upward movement in the book publishing industry were e–book sales. Now, of course, that’s misleading because, still, 95 percent of the revenues in the industry are coming from physical book sales. It’s just that the only thing that is growing are e–book sales, so everyone focuses their attention on that and says the “revolution” or the “crisis” of the book publishing industry is about e–books, and that’s not the case actually.

Rail: So it’s largely a media ownership issue.
Thompson: Yes, it largely is because the great transformation of the last 40 years has been the rise of the retail chains, the Barnes & Nobles, the Borders, and so on. And those large players, on which the whole industry depends because they’re shoving all those books out there into the marketplace but are now in a shaky position because of the economic recession, coupled with the fact that there is a siphoning off of sales into other outlets—part Amazon and big box retailers like Wal-Mart, and part e–books. They are losing market share. And so, now you see that Borders is in a very dicey position, even Barnes & Noble is beginning to wobble now. And that’s what’s making the industry extremely nervous, because the whole industry depends on those big retail chains pushing all that content out there in the marketplace. That’s where 95 percent of the revenue is coming from.
Rail: It’s become a very different time than the “Golden Age” of publishing in the middle of the 20th century, no? What are some other differences in your view?

Thompson: Agents. While agents existed in the 1930s, ’40s, and ’50s, they were not as prevalent or powerful players as they are today. What you had from the 1970s and ’80s on was the rise of what I call the super agent—a character like Andrew Wylie, say, who’s really driven and is pushing the interest of his authors above all else, and therefore able to command very large advances and so on and so forth. That didn’t exist before, so you could have small publishers like Farrar Straus and Giroux and so on who could basically keep their authors because they would simply lend them money if they were hard up. There was a very close relation between publishers and authors. That was all destroyed in the 1960s and ’70s, completely. Before then publishers like Knopf and Farrar Straus could exist as relatively small independent publishing houses, a sort of genteel business where they made decisions about liking a book without being preoccupied with their balance sheets. But once the agents became significant players they demanded high advances at a time when retail chains were growing and houses like Simon & Schuster and Random House were coming under the umbrella of large corporations and were able to afford the large advances. Farrar Straus and other publishing houses could therefore no longer play the game—they couldn’t keep their authors and they were out-maneuvered by the larger houses. So they had to decide to sell to corporate owners and it was no longer possible for those once-independent publishing houses to remain independent. So the field became polarized where you have a small number of large, corporate groups that now own the former independents because they have deep pockets and then small presses.
Rail: And so that also spawned the “big book?”
Thompson: Absolutely. I spent a lot of time at large publishing houses like Random House and Penguin and Simon & Schuster and HarperCollins, and I tried to understand how these large organizations work. A large publishing corporation is driven by one fundamental concern and that’s what I call the growth conundrum. You have to deliver growth. You can’t remain static. But the problem with publishing is that it’s a very mature industry, and it’s largely static. So the conundrum is, how do you achieve growth when the market is static? Now a small publisher like Akashic Books doesn’t really mind actually whether he’s growing or not—Johnny Temple owns the company. As long as he can pay the bills, and pay everything, he’s fine actually. But a large corporation can’t do that. They’re not masters in their own house. They have to report up to someone else, and they have to deliver growth; otherwise, the C.E.O. is sacked. How do they achieve it? Well, you might think it’s obvious: Publish more books. But, in fact, it doesn’t work. These corporations grow to a point where they have an amalgam of companies under one umbrella. At the same time, they’ve rationalized all the sale forces, because that’s how you achieve economies of scale. And now you’ve got a sales force out there that is trying to sell five to six thousand titles a year—five to six thousand new product lines every year. And you want to give them more? No way! They can’t cope with what they’ve got. So they prioritize and develop the concept of the “big book” and so the basic approach is to do fewerbooks but try to sell more copies of the books they publish. That’s the basic mantra of the industry: Publish fewer titles but try to sell more copies of the titles you’re publishing. The others basically sit by the wayside.
Rail: So let’s come back to e–books. Aren’t they easier and cheaper to distribute?

Thompson: I think there’s a lot of misunderstanding about the cost of e–books. The question of the printing and paper is a relatively minor part of publisher’s cost, maybe 10 percent of their overall costs. Most of the costs are tied up with the overhead costs of running a publishing organization, the editorial time that goes into publishing and developing books, and all the design that goes into a book, whether it’s to be printed or not. And then, of course, there’s all your marketing and publicity expenditure. A relatively small part is tied up in the actual physicality of the printed book. But people think, “Well, if you get rid of the book, your costs must be zero, or very little.” But in fact that’s just not the case. Where you’re really making a difference when you move to the electronic form of delivery is not with regard to publishers, it’s with regard to the other intermediaries in the supply chain and the real estate of the bookstores. The significantly cheaper price for an e–book you see online compared to a traditional hardbound book basically reflects cutting out the distribution, real estate, returns, and everything associated with the side of physically moving the books.
Rail: So what do you see the publishing industry look like in two years or five years? How do you see it?
Thompson: There are some commentators who say the industry is finished and the great traditional publishing houses are going to collapse and the retail chains are going to collapse and so on. I don’t take that view. This is a very complicated industry and you’ll see there are some publishing houses out there doing rather well right now. It’s a complex picture and I don’t think there’s going to be that sort of dramatic, radical change. But I think we are at a critical time; I think there are changes that are going to be happening that are significant and what happens in the retail sector will be crucial to this. If Borders closes it will be catastrophic for the publishing houses because Borders owes them so much money and they would have to return all the stock and so forth. But it’s also an exciting time. There’s such a lively debate out there in the blogosphere around books and ideas and so on and so forth, and that kind of world is exploding. And there’s lots of experiments and innovation and so on, you know, like the Open Road Integrated Media and companies where people are experimenting with new models and new ideas and so on. But if you’re a big publishing behemoth, a large corporate group like Random House or Simon & Schuster, you’re going to be a little bit worried about this situation, partly because you don’t know what the consequences of these profound changes are going to be for your top line and your bottom line and you’re going to need very understanding corporate masters who say, “Well, okay, let’s just take a patient view and see how this shakes out over the next few years.”

Rail: But will e–books become more of a norm as time goes on?

Thompson: There’s no consensus on this issue. I interviewed many, many key players in the digital divisions of all the large publishing houses, as well as the medium and small size publishing houses and everyone is very interested in this topic but everyone has a different opinion about what will happen in the future. Some believe that it will sweep aside the printed book and the printed book will become a relic of the past that you find only on the bookshelves of collectors. Whereas there are others who say it will plateau at some level. Some say it’s going to be 10 percent of readers, others say it’s going to be 20 percent, others 50 percent. Everyone has a different opinion on the matter. My own view is that what we will see is a differentiation of the marketplace. Readers and consumers have many different values, and beliefs, and preferences and you will see some be very happy to read on electronic devices of one kind or another. Others will remain wedded to print on paper and will want books in that form. There are deeply embedded cultural practices around writing and reading and these are not going to change quickly and easily. There are people who believe that technology sweeps all before it, and that technology is really the driving force of social change. I don’t take that view. I regard that as a technological fallacy—the view that technology is a driving force of social change. I think technologies are always embedded in social, cultural context and what technologies get taken up depends on a variety of factors that shape people’s practices and beliefs. There are many examples of technologies that went nowhere. You remember the great CD–ROM fiasco? In the late 1980s all publishers thought that the future of books was the CD–ROM. A lot of money was invested; publishers set up whole units developing CD–ROM technology and then it disappeared. It just didn’t go anywhere largely because it wasn’t very useful. So technology doesn’t produce results in and by itself.

Rail: But the industry is no doubt changing as we speak.