06 January 2009

A Publishing Squeeze (3)

[continued from 03 Jan 09]
The third common factor in the entertainment/publishing industry's problems is its underlying culture of secrecy, which is only exacerbated by accounting more dubious than Bernie Madoff's. A few recent web-available items help illuminate this particular problem. For example, McGraw Hill has laid off 375 employees, without the excuse of substantial exposure to either returns or marketing problems... because best estimates indicate that the majority of McGraw Hill's income comes from direct sales and sales to educational and professional markets that simply do not have the problems of trade publishing. (This is another example of the "thirteen niches" issue.) At the same time, "austerity" in publishing seems to concern the occasional expense-account lunch, rather than, say, the difference for a print run of 50,000 books between shoddily-applied foil embossing on the cover and spending an extra two workdays on accurately describing the book in the catalog.

This culture of secrecy — perhaps the best example of which is trying to find out how many copies it takes to be a "best seller" — is reflected in outsiders' perceptions of what "fixing" the "problems" will take. For example, one Harvard business professor claims publishing shouldn't change6 and WSJ describes the situation, but industry insiders object that she doesn't know what she's talking about. Of course, the main reason that she doesn't know what she's talking about is that nobody does: There simply is no data. Consider, for example, the foil embossing that I referred to at the end of the last paragraph. Nobody has ever done a controlled, double-blind study that correlates foil embossing on the cover of a trade book with any measure of publishing success: not actual sales to consumers, not even copies placed in retail outlets (or, for that matter, returned from retail outlets) so that they're available to consumers. And even if such a study existed, its continued relevance in a world of increasing online sales would be questionable. Instead, there's a longstanding assumption that because shiny packaging "worked" in increasing sales of toys to children in the 1960s, it inherently works for this type of product with this type of consumer.

I'll be merciful this time; the fourth common factor — with math — will wait for the next entry. Hint: Get out your calendars and a basic text on thermodynamics; or maybe just read this article on entropy in nature (no math required!) and ponder whether "increasing disorder" is something that applies to the entertainment/publishing industry.

  1. Her comments just expose the intellectual bankruptcy of business education today... because they are not about business. As should be pretty clear, I have very little respect for arguments over how many marketing dollars can be accounted for (under GAAP standards) on the head of a pin — particularly since we can't even agree on what kind of pin we're using.