03 January 2009

A Publishing Squeeze (2)

[continued from 29 Dec 2008]
The real question presented by the entertainment/publishing industry's problems is not "what?" so much as "why?". That the industry4 has significant financial (and other) challenges to look forward to should surprise nobody. That some — and perhaps most — of the industry's problems resemble the rest of the economy, despite my imprecation at the end of part 1 that "I do have a problem with trying to force [the entertainment/publishing industry] to look like every other business, and then whingeing when it won't act that way," shouldn't surprise anyone either. There are common factors, and they are important; they just are not as dominant as the "general purpose business education" would have one believe.

The first of these is the product problem: Although there supposedly are salescreatures who can sell iceboxes to Eskimos, a company that is selling stoves to Eskimos will probably do better in the long run. The key is that the company must actually listen to what its customers want and need, and adapt its products to that, instead of deciding what will be profitable and trying to make the customers buy what it can make at the highest margin. If that sounds like the US automobile industry in the 1970s and 1980s (and, for that matter, today), it should: That's exactly what I'm referring to. The ultimate point is that there is not one, single factor that should determine everything. The US automobile industry had problems in the 1970s and 1980s due to a confluence of two factors: a well-deserved reputation for poor reliability and a focus on large vehicles that cost more to run than did many imports. It's much the same today, with the overemphasis on suburban assault vehicles that chew through tires and gasoline at a horrendous rate. The entertainment/publishing industry faces a similar confluence of multiple factors: a well-deserved reputation for shoddy products and a focus on blockbusters that cost more to participate in than many alternatives.

The product problem results from a simple management flaw. Well-managed companies and industries almost always include decisionmakers who are themselves significant consumers of their products. If one looks at the entertainment/publishing industry today, though, one will find very, very few consumers of the products in decisionmaking roles. Some of this is the inevitable result of conflicting demands on time; Steven Spielberg probably doesn't have a slot open every Saturday to go see a matinee or three. Similarly, I'd be shocked to find out that Sonny Mehta had chosen to read as many as half-a-dozen current novels from imprints other than those he controls last year... except, perhaps, for anything for which he was acting as a celebrity judge (think Cannes Film Festival). And Mr Mehta is probably much more aware of what is actually out there than many others, and in particular two or three management layers immediately below his level. Most of it, though, is attitude: The attitude that the only thing that matters is present profitability.

The second of these common factors is an inefficient, oligopolistic layer of distribution between the product creators and the ultimate consumer. Again, the automobile industry provides a good example. Just try buying exactly the car you want — with no unwanted extras, such as worthless undercoating or an illusory extended warranty or a "complimentary" automobile club membership — by calling Ford or GM directly. Even better luck getting warranty repairs done! The entertainment/publishing industry's distribution layer is even worse, and even more shadowy than is Honest Joe's Lincoln/Mercury in Beautiful Suburban Rosemont.5 The impending collapse and/or bankruptcy of Borders is a good example.

The distribution layer problem results in part from the same management flaw as does the product problem: The "buyers" who are deciding what pieces go into the various distribution outlets are not themselves significant consumers of their products. If they were, we wouldn't have the continuing problem of cover designs and cover copy pointed at some non-mystery-reader in Ann Arbor ruining the marketability of a work that must ultimately be purchased by bespectacled would-be detectives in Malibu to be successful.

The third of these common factors... will wait for next time. Warning: mathematics ahead.

  1. I'm using "industry" as shorthand only. There is no publishing industry; there is, at most, the bastard offspring of a drunken, three-century-long orgy of thirteen distinct subniches. The entertainment "industry" requires even more divisions, because the orgy isn't even limited to a single species...
  2. That is an actual dealership that I sued repeatedly for various consumer-protection violations back in the 1990s; only part of the name has been changed to protect the guilty. Let's just say that the ownership of that chain of dealerships is a good family business and leave it at that.