Book Publishing is Broken

Making an emotional argument for the old days of book publishing won't save it. What will?

Welcome to another edition of Publishing Confidential. If you’re a new subscriber, here is a little bit about me: I’ve been in the book publishing industry for close to 30 years and have done everything from publicity and marketing to acquiring and editing, with a stint as a literary agent in between. I am the founder of KMSPR, a book publishing consultancy firm. I work with authors, publishers, and publishing adjacent organizations.

Let’s jump right in.

Anyone who pays attention to book publishing news has probably heard about the Penguin Random House (PRH) layoffs this week. You can read more about what happened here. Sadly, people have lost their jobs. I won’t rehash what has already been written about the layoffs because that isn’t the purpose of this newsletter. Let’s discuss the current health of the book business instead.

I. Consumer Behavior & the Economy:

It’s impossible to assess the health of the publishing industry without examining what’s currently happening in other sectors. This week, I read about clothing brands Banana Republic and H&M diversifying their offerings to increase revenue. Banana Republic is betting on home goods, and H&M will begin selling other brands online and in stores. Streaming platforms such as Paramount+, Peacock, and Disney+ have recorded revenue and subscriber decline. Tech companies have continued layoffs, having overstaffed during the pandemic. The advertising business is in a slump because brands are slashing budgets. Disney World saw its lightest July 4th crowds in decades. All of these roads lead to the same destination: consumer behavior.

Consumers are spending money—they’re just spending it on specific items: Olive Garden, Crocs, Levi’s, and Build-a-Bear have each seen double-digit revenue growth this year. Books, streaming services, and the box office? They’ve each seen a decline in sales/subscriptions. Here’s a theory: You can go to Olive Garden wearing Crocs and Levi’s, and you can go to Build-a-Bear with your kids. Neither of these experiences can be replicated by watching TikToks or scrolling through another social media platform for free. Conversely, suppose you had a choice between watching free TikToks or YouTube videos or paying for a book or streaming service. In that case, you’d choose the former (I realize most subscribers are readers, so I don’t mean “you” specifically). Additionally, when someone is shelling out hundreds (or thousands) of dollars to see Taylor Swift or Beyonce in concert, they will unlikely have more disposable income for entertainment. They say Taylor Swift is helping the economy; I say she is killing parts of it (Sorry, Swifties).

All of this matters when we look at book sales. Why? Because during the pandemic, there were limited choices of entertainment. We all watched Tiger King because there was nothing else to do. We weren’t spending money on commuting, student loan repayments were put on hold, and many of us received cash infusions from the government. People also bought many books at the time because there was nothing else to do. It is now 2023, and everything has changed. Interest rates are high, food is expensive, student loan repayments are due once again, and despite unemployment remaining low, many people are out of work. Again, money is being spent, but very specifically.

II. Book Publishing is a Business

After the PRH layoffs came to light, a lot of folks on Twitter were pontificating about how this was somehow the “changing of the guard” at the publishing house. That very well may be, but let’s get something straight: those jobs (more than 60) are not coming back any time soon. This is not a situation where the “olds” are getting out so the “youth” can replace them. Instead, it is a fiscal measure to create more efficiency. One could ascertain that a new CEO has been tasked with getting things on track after a failed merger that cost PRH more than $200M in kill and attorney fees. Let us also not forget that a particular agent was paid $250K by PRH for ONE DAY on the stand during the DOJ trial. What all of this tells me is 1) PRH couldn’t afford a $2B all-cash deal for S&S, 2) The merger with S&S would have given PRH a great deal more profitability, and 3) Had the merger gone through, the PRH layoffs would have been worse because S&S was the money-maker of that deal.

While I realize that Knopf is a storied literary publisher, I also know that making an emotional argument for preserving it is a moot point. Publishing is a for-profit business. Yes, legendary editors were let go or took buyouts. Sure, those same editors each have a profitable backlist. However, you must make tough decisions if you are a newly minted CEO and see where the savings are. A publishing imprint doesn’t require an editor to sell its backlist—the sales department does that. I don’t say this to be harsh; I am looking at it through a business lens. If imprints aren’t pulling their weight, those are the easiest places to make job cuts. This has always been the case.

PRH isn’t the only publishing house that experienced layoffs this year. Here are other publishers who cut staff this year: Abrams, Castillo Media, HarperCollins, and Hachette (via buyouts—it remains to be seen if layoffs will occur). It’s important to note that when a publishing company states they’ve had “record profits,” it doesn’t mean more money is allocated to staff. Mostly, announcements like that are for the shareholders’ benefit, and you’d have to decipher complex corporate balance sheets to analyze the company’s fiscal health.

If frontlist sales are lagging, which they are, across the spectrum, then backlist sales are likely lagging. The backlist is every publisher’s bread and butter—those sales fund frontlists (and by frontlists, I mean “current”) titles. If a publisher experiences a significant drop in backlist revenue, trouble is on the horizon. The frontlist often doesn’t make enough money to carry a publisher through the year. Big books like Prince Harry’s certainly help a publisher’s bottom line, but that is only one book.

When I was VP of Publicity at Atria Books in 2008, we published The Secret. Love it or hate it, that book made a lot of money for S&S. Things were good until they weren’t. The following year was tough—repercussions from the financial crisis were being felt, and sales weren’t great. The pressure was on for Atria to find another hit outside of its pillar authors (4 bestselling authors who reliably published one book per year). I won’t get into specifics, but it was difficult for me and my staff then. The publishing ecosystem still operates this way: big hit makes money—go find another one. The problem is that finding another big hit is challenging, and that particular publishing model has destabilized the industry, especially when a company’s backlist isn’t selling well.

III. It Doesn’t Have to be This Way

I’ve previously written about the ambiguity of P&Ls (profit & loss statements). I’ve also written about author advances and that publishers shouldn’t acquire books if they don’t have marketing budgets. I stand by all that and want to add this: publishers should work in reverse when they create marketing plans. If you are adding an influencer campaign on TikTok to your marketing plans, you should look at the engagement rate of each account—how many views do their videos receive? What is the vibe of their content? The number of followers someone has on social media platforms is irrelevant right now. Remember that social media audiences are fragmented—hello, Twitter/Threads/Bluesky/Instagram/Mastodon/Everything else. It makes marketing books increasingly difficult when audiences aren’t concentrated in one place. The explosion of Twitter clones also means the attention economy is more crowded. That’s not great for book sales!

Since my background is primarily in marketing and publicity, I can’t help but think that the publishing industry has a branding problem. Readers are loyal to authors, not to publishers. Why not beef up branding efforts and come together as an industry to create more awareness around books? Some of us remember “Must See TV” and instantly recognize that NBC was the network that broadcast Friends and Seinfeld on Thursday nights in the 90s. Not all of us drink Budweiser beer, but we remember the Clydesdale horses in their commercials. We were aware. The book industry can get creative and innovative about being a collective brand. One reason beverage companies advertise during the Superbowl is to create awareness around an entire industry, not just their products—food for thought.

Another problem, and I know many of you won’t agree, is that too many books are published. Book publishing is the only industry I can think of where, if something isn’t selling, more of it is done. Publisher’s lists expand; I understand why—they must keep building their backlist. That said, tightening lists won’t ruin the industry, especially when there isn’t a marketing and publicity budget for every title. The onus can’t continue to be on authors to cover every aspect of promotion simply because a bigger book is eating up their publisher’s budget. Author advances hardly cover someone’s living expenses (don’t get me started on publishing salaries).

Format and pricing are front of mind for many in the book industry. There’s still a stigma attached to publishing paperback originals; I don’t understand why. Would you instead publish a book in paperback with a $14.99 price point and sell more copies or stay in hardcover for $26.99 so readers don’t take a chance on a debut author? Some may argue that hardcover profit margins are better. My counterargument is that you can’t have a profit margin unless there’s a profit.

Given the current state of the industry, something’s got to give.

IV. A Final Word about Social Media

We have entered an era where Twitter is, to put it mildly, a disaster. Tweet views are limited. The algorithm is erratic. If I had to guess, I’d say Elon Musk wants to send Twitter into involuntary bankruptcy. Bluesky is still an invitation-only platform. Threads may have a shot, but rebuilding a following is not the priority there—engagement is. TikTok is launching its own publishing company, which will undoubtedly prioritize its books in the algorithm. Instagram is attached to Threads, which is good and bad: Good because your audience is built-in. Bad because your Instagram audience is now fragmented. Facebook…is still Facebook.

Agents, Editors, and Publishers must understand that an author’s social media following differs from five years ago. I realize that an author’s platform is attractive to them, but they must look beyond the number of followers. An author can have 200K followers on Twitter, and no one will see their tweets. An author might have 150K followers on TikTok but get only 200 views per video. Social media companies own their algorithms and do as they please with them. There are no guarantees that any social media platform will stick around. The publishing industry must look at Twitter as a cautionary tale: Platforms are at the mercy of their CEOs, and if a particular CEO decides to limit views for non-paying users, it significantly affects the user’s ability to consume information on that platform. Signing people to book deals based on an average book idea and a large social media following is no longer viable. Nor is cobbling together marketing plans with long lists of influencers while omitting their reach. Ignoring the rapid evolution of decentralized social media will only create setbacks in the publishing industry. No one can afford to operate in a silo.

Programming note: I’m away next week, so look for a newsletter the week of 7/31.

As always, send thoughts/questions to: publishingconfidential@gmail.com

Afterword:

What I’m Watching: I just finished the Smartless docuseries on HBO. I loved it. Jason Bateman, Will Arnett, and Sean Hayes are hilarious. I enjoy their podcast, and it was a treat to watch them on screen.

Under the radar thing you should watch: Hijack on Apple+ is super suspenseful, but Idris Elba is fantastic in it. New episodes drop every Wednesday. Don’t sleep on this; it’s a great limited series.

What I’m listening to: The Retrievals podcast, produced by Serial and The New York Times. It’s about women at a fertility clinic who experience excruciating pain…then they find out why…

What I’m reading: So far, my summer reading is all MBA-related. Boo.