Publishing in the Twenty-First Century: An Interview With John B. Thompson

Let’s talk about what you learned.
In essence, there are three forces that have transformed the field of Anglo-American trade publishing since the 1960s.

First, there’s the growth of the retail chains. This is a hugely significant transformation that began with the mall stores in the 1960s and gathered pace in the 1980s with the rise of Barnes & Noble, Borders, and other superstores. It had many crucial consequences, of which the decline of the independents is just one. But more important, it inverted the financial model of the industry, because in the 1940s and 1950s the paperback was really the financial foundation of trade publishing. The hardback industry existed to feed the paperback lines, and the paperback was the crucial revenue generator. The application of mass-marketing techniques to hardback books simply did not exist until the retail chains arose. From the 1980s on, the hardback became the financial foundation of trade publishing. The continued revolution on the retail side followed into the 1990s and into the 2000s with the rise of Amazon and the rise of the wholesale clubs.

There was a second crucial shift in the 1980s with the rise of the superagent, a new breed of agent whose defining characteristic was that he emerged from outside the field. The classic case is Morton Janklow, who was a lawyer. When he founded what is now Janklow & Nesbit, he did it purely by accident. An old college friend said, “I’ve written a book about Richard Nixon, and will you sell it for me?” Janklow didn’t know anything about publishing. He said, “Sure, I’ll do a favor for you.” He called half a dozen publishers and said, “Send me your contracts.” And he was shocked. He said, “I’m not going to let my friend sign these contracts. I’m going to rewrite them.”

The other key superagent is Andrew Wylie, who also didn’t have a background in publishing. He decided to set up a literary agency straight out of college. And he, again, took a very different view from traditional literary agents. He didn’t think his job was to mediate between the author and the publisher. He saw his job as being an advocate for authors’ interests, in a legalistic sense of the term. He was representing his clients’ interests, and he was going to maximize their returns.

Those two figures are the epitome of the superagent, and they transformed the field. They created a different breed of agent, and even those agents who despise them are nevertheless influenced by them.

The third development was the consolidation of publishing houses under the umbrella of large corporations. As the retail chains became more powerful, publishing houses had to strengthen their position so they could negotiate more effectively, and as the literary agents became more powerful, publishing houses had to get more powerful so they could compete for the most prized assets and contracts.

How did those three processes alter the world of publishing?
First, they produced a polarization of the field. When you look at it now, you see that there are a small number of large corporate groups, and a large number of very small indie presses. But there’s very little in between. It’s hardest to be a medium-sized publisher. You don’t have the economies of scale of the large corporations, which benefit from economies in sales and distribution, in the back-office systems, and so forth, and also have deep pockets they can dip into when competing for prized assets or authors. If you’re a small or medium-sized publisher, you simply can’t compete. Even if you have a book that becomes a surprise best-seller, you can’t hold on to that author.

The smaller presses benefit from something else, which is what I call the economy of favors. They don’t have the overheads of the medium-sized publishers, and they support one another—they help one another out. It’s a community that shares information and contacts. If you want to start your own company, you call another small publisher and say, “Where can I find a good designer?” or “How can I get good distribution?” Moreover, the freelancers upon whom they all depend operate a dual economy. When they work for a small indie press, they’ll charge one rate for a cover design; when they work for Random House, they’ll charge a completely different rate, maybe four or five times the amount. The freelancers share an empathy with what the indie presses are doing. The indie presses are able to flourish and survive, although they occupy a difficult place and they’re usually living hand to mouth, and many of them do go under; they’re very vulnerable. But they can flourish in a shared space.

The medium-sized publishers don’t have that shared space or those economies of scale. They’re extremely  vulnerable, and that’s why there are so few of them.

The second consequence of the polarization of the field is the preoccupation with big books. This is extremely important, and it stems from what I call the growth conundrum. If you’re part of a large corporation, you can’t remain static. Reporting to your shareholders, to your parent corporation, means that you have to grow about 10 percent every year. The conundrum is that you work in an industry that is largely static. How do they solve that problem? That’s what all the senior management grapple with.

One might think, “You just publish more books.” Indeed, some of them tried to do that a few years ago. In fact, that’s a false answer; it just makes your problems worse. If you’re a Random House, you’re dealing with several thousand books a year—several thousand new product lines. Your sales force is overwhelmed. It’s no good saying, “I want to publish a hundred more books.” They can’t cope.

All the corporations have come to the view that the way to solve this growth conundrum is to publish fewer books—but to publish those books that will sell more copies. These are what they call “big books.” They want to clear out that lower bit of midlist titles, to stop publishing them, and to focus more and more of their energy on big books. What is a big book? You might think that’s obvious: A big book is a best-seller. But that would be wrong, for the simple reason that big books exist before the book has ever been published—or even before it has been finished. It’s a hoped-for best-seller; it exists in the space of the possible. It’s nourished by hope and expectation. In the heart of the industry has developed a space for what I call the web of collective belief. A huge amount of energy goes into the process of persuading others that what you have in the form of an idea for a book, a proposal, or a draft manuscript, is going to be—in the future—a best-seller.

If you were in an industry where you created ten food products, you’d have a marketing plan for each of those ten products—you wouldn’t just put them on the shelves and hope people would wander into the store and find them. The idea that you would make things but not market them seems bizarre. But the publishing industry says, “We’re going to create ten products and market only a couple of them; for the others, we’ll just throw them out there and see how they do.”
Well, there is absolutely a process of prioritization, and it means that there’s a huge skewing of resources within the large corporations toward that relatively small proportion of books that they select out as big books, where they’ve made a big investment in terms of the advance. That small proportion of the list commands a large proportion of the marketing budget.

The idea is that those big books make up for the losses that the other books suffer.
It’s an industry based on serendipity. With the exception of the big-name authors, where you can predict sales relatively well, with many of the other new books you just don’t know how well they’re going to do. So you put a lot of resources behind the big books; sometimes it pays off and sometimes it doesn’t. Also, all the large houses allow for the “black swan,” for the possibility that some of those books that they didn’t put a lot of money behind might nevertheless turn out to be surprise best-sellers—like The Black Swan itself [by Nassim Nicholas Taleb], which was not a book that was heavily promoted. But the truth is that a relatively small proportion of the books that are published by the big houses do well. Roughly half will meet or exceed financial expectations, but the other half will fail to meet those expectations. About 30 percent will significantly exceed expectations, but only about 10 percent will really do enormously well.

Most authors are midlist authors who receive little support. From their point of view, there’s something fundamentally wrong with the system.
You’re right. The authors experience this logic in a very painful way—they experience a very alienating structure. This is an industry that is based on the growth conundrum and the need to solve that. You cut out the lower strata because that’s diverting your energies and your consolidated sales forces and so forth. It’s not a model that is aimed at cultivating the long-term careers of authors. It’s aimed at solving the growth conundrum.

In one sense, there’s a financial logic to the current model: It produces a certain amount of revenue that makes a company moderately profitable. Yet it’s a system that doesn’t work for most authors. Are there other models that might meet the needs of publishers and authors?
Of course there are. Even the medium-sized houses don’t have this same need to solve the growth conundrum. That doesn’t mean they don’t occasionally cut authors loose, but they are much more open to the cultivation of the long-term career. Look at Dan Brown: He was a midlist writer; his books were not doing terribly well until there was a breakout book that made the fortunes of Doubleday and Random House for a number of years. Only if you are prepared to stand by authors do you open up the possibility of that happening. The large publishers are dominated by short-termist mentalities foisted upon them by the fact that they’re owned by large corporations that demand unrealistic levels of growth and profitability for this field. Most of the smart people who work in the industry know and understand this. They have to play the game, but it’s not a game they want to play.