Should We Worry about the Big 6?

Should we worry about the survival of the six main publishing houses? This question has been occupying lots of minds, given the massive change in technology and arrival of new players. After reading Mark Coker's blog, which featured a compelling analysis of the pricing of e-books, I felt equally compelled to opine on the matter. Mark is the founder of Smashwords.com, a smashing online company, which helps individuals self-publish their works, in e-book format, through all the standard channels (except Amazon). The post is packed with useful information: notably that e-buyers prefer books that are over 100,000 words, and that $3.99 seems to be the price tipping point for volume sales. But Mark also makes some predictions about the future of the printed book, at least his tone implies it. He predicts that within five years most books will be sold to be read on a device, which intentional or not, appears to be a warning to the main publishing houses. I'm skeptical, because whether printed books disappear or not is irrelevant. Big behemoths know how to survive, and history teaches us that the biggest chance of survival lies in their camp.

Talking about history, I have lived through three technical and cultural revolutions, and I'm still in my 40s. Even though, the upheavals were in different industries, their progression towards change reflects the same pattern. When markets behave irrationally, their trends carry a definite logic. What is happening to the publishing industry is not that different from what happened to the music and film businesses.

I recall clearly the 80s when the four-track home recording studio landed like God's gift to hordes of frustrated musicians. Suddenly, there was an explosion of garage bands, all types of bands, making records, creating record labels. Some of these homegrown labels became important players. Remember Rough Trade Records in the UK or even IRS Records in the US? But how many of these indie houses still exist today? How many of the bands of this era survived? A handful: the Police, the Clash, Duran Duran, I dare say, being the only ones still playing . . . Not much for posterity given the amount of ink poured out. What happened was that the small fish were gobbled up by the large ones. Today the music business is ruled by just three main companies, mainly the result of its failure to adjust too late to new technology. Nonetheless, after all the commotion, the fears, stability has returned. The industry is controlled by even more powerful players. Of course it will never be like the good old days, but consolidations, mergers and acquisitions helped the big guys to survive. The music market contracted and corrected itself.

The same contortions have been underway in the film business. The arrival of the video camera gave birth to legions of filmmakers over the last ten years. Film companies and distributors were created overnight. An army of mushroom-like film festivals follow the demand in order to soak up the glut of film releases, leading obviously to the collapse of the minimum guarantee (the fee a distributor pays upfront) and shrinking theatrical windows. Today, it is virtually impossible to make a living as a filmmaker. The entire structure imploded under its own weight (supply and demand) and is nowhere near the light at the end of the tunnel. But the best companies were acquired during their heydays, Shooting Gallery, New Line Cinema, and so on. If there is a sign pointing at the future, the big Hollywood studios are smiling. Having turned their backs on the independent films, they have never fared better in worldwide box offices.

So where does this leave us in terms of our six major publishing houses? Are the big guys worried about self-publishing? I doubt it as well. They may see a temporary lack of earnings, but the long-term scale unarguably tips in their favor. Great companies are like tankers. They can only be involved with large projects to make their time worthwhile. To bring a tanker cruising to a halt takes miles. Big players can only get involved with big momentum. Like everyone who was playing in the band 10 years ago, and was making a film five years ago, these days, everyone is writing a novel. Writing a novel is the new trend. Anyone can do it and publish it. But to make a living out of it? How many have the patience, the burning desire to share what they believe they have to say, and the spirit of entrepreneurship? Very few. Besides, not everyone is creative or knows how to sustain a creative career. The writer's life is like free falling without a net. Few can withstand it. In the next five-10 year window, most of today's new writers will have retired. The future successful writers will be those who will have invested much of their time building a platform and proven their writing competence. Think of the Jeff Kinney, Hugh Howey types, exceptions who can sell mass volume through their own efforts. Writing will remain a hobby for the majority. The big publishers can wait for the natural selection to happen on its own, to scoop up the most promising commercial talents. Does the name E L James mean anything?

Likewise, are they worried about new companies on the block: the likes of Open Road Media, Argo Nevis or Diversion Books? I doubt this too, because they must appear like irresistible candies. Who would not want a new company producing great titles, hunting high and low for back catalogues, leading with innovative marketing plans, and capturing market shares? The laws of jungle still apply to the book market however. With so much competition around, the growth these companies are experiencing is just not sustainable. While for the time being, the sky is the limit, over time, the weakest of these new companies will go bankrupt, and the most performing ones will either sell themselves or accept to be acquired for mouth-watering premiums. Good Read took the lead and accepted to be taken over by Amazon. Penguin is merging with Random, while Amazon is buying back catalogues from smaller publishers. Consolidation is happening now.

This trend is underway in the media front as well. Dreamworks taking over Awesomeness TV (a YouTube channel!), TWC buying a chunk of Hulu, Yahoo acquiring Tumblr, are no coincidence. Should the publishing industry panic? The horizon for the big publishing houses looks pretty bright. The savvy and shrewd business people know that this evolution is just temporary bad weather. Why risk millions of dollars in investments and human resources, when someone maverick is willing to take all the risks on your behalf, for free? Why start new time consuming ventures, when once the new company's foundations have been laid and tested, you can simply buy it? The tendency is to jump on the bandwagon, afraid to be left behind or miss important opportunities. But there is wisdom in chaos. So whether print books disappear in the next five years is not important, because the new leaders will be annexed and consolidated along the way. And this is great news for Smashwords, because if the company keeps expanding drastically, it could become the lucky target of a much bigger fish, with Amazon or B&N ogling over, finding their business too seducing to resist. Shine bright and you will attract all the attention.

Frederic Colier