March, 2000

The scenario we have presented for The Book Trade in 2010 differs almost entirely from the The Book Trade of 2000 that we know. We prepared the scenario over a considerable period of time, and included the thoughts of dozens of people. I think my colleagues Mark and Hugh would agree with me that, while we are humble about our ability to predict all the particulars of change, we are very comfortable that the magnitude of the change we are predicting is entirely reasonable within the next ten years.

In the few weeks since we prepared the scenario, one thing I think we may have been a little conservative about, frankly, is the amount of change we predict among the ranks of “top publishers”, and the extent to which new entrants will enter the top ranks. Some recent opportunities have brought me closer to the strategic challenge facing today’s publishing companies in meeting the dual agenda of continuing to wrest profit from today’s business models while envisioning and building new ones. It’s not easy. And it is obvious from the results so far that a similar problem faces book retailers. Amazon has been much more successful at the online book business than have the brick-and-mortar stores which have challenged them, and the potential clicks-and-mortar synergies have not become apparent yet.

Their own version of this strategic dilemma faces agents and authors. Their roles, too, are completely different in The Book Trade of 2010. Agents, to us, look somewhat more like publishers. So do some authors. But we try to avoid being too facile about how easily they will do this on the grandest scale, because we still see enormous opportunities for publishers to add value from the cumulative capability developed by marketing a lot of content.

We all have the same problem: publishers, booksellers, authors and agents. We have a way of doing business that, despite an accelerating rate of change over our entire lives in the business, has a certain comfortable form with historical antecedents to shape our understanding. We all have investments in that form: knowledge of the rules and the players, an infrastructure of relationships, at least, and sometimes a physical infrastructure as well. All of us have legacy expectations: publishers, authors, and agents from our backlists, and booksellers from an ever-expanding base of individual and institutional customers that buy books they need and books they want for years and years until death, liquidation, or, in the old days, a change in geography took them away.

But that investment is under assault. Our assets are being undermined by new ways of doing things: today we have new ways to make and sell the books we make; tomorrow we’ll have new ways to deliver the book’s value to what is today’s book customer.

Even the most secure assets, the copyrights in intellectual properties — which, of course, is a part of the value that the bookseller does not share in today — are not secure in their value as the technology changes. Publishers are already “leaking” value by relinquishing rights on properties that have are not perceived to be viable in today’s book economics but which actually still are margin-producing today, and will very shortly be able to produce much more with no additional investment because of the new forms. I have some extensive personal experience with all of this, in effect enabling me to migrate from being an author and an agent to a web site proprietor and content developer with content that publishers were apparently happy to throw away.

But I only benefitted because I knew things that no author or agent would have needed to know to function five years ago. And, frankly, what I know is still not as important to today’s agent as knowing which three people to call to get a six-figure bidding war started for a movie star’s memoirs. But now the things I am learning in cyberspace are taking me to Web sites that pay serious money for content; I can see the day is not far off when I’ll be able to get more from somebody I know in the Web world than from anybody in what we call publishing. It is clear that Web sites have more to spend all the time; it seems that publishers have less.

All of us have a dual challenge. We have to use the technology today to help us with cope with the world we are already in. That means writing, representing, publishing, and selling books “like we always have”: proposals presented, advances against royalties, delivering an attractively- and efficiently-printed book, dealing with the historical retailing logistics including selling new titles in advance, accepting returns, having authors and books meet at promotional appearances, pushing the right media buttons with TV, radio, and print. There are all sorts of tools being developed to help us do this, including PubEasy and BookTrack on the grand scale, and scores of other systems and Web sites in somewhat less ambitious ways.

But “being modern” in the ways one conducts the business we’ve always known will not be an adequate solution for very much longer. A new infrastructure for the delivery of what we’ve delivered in books is being built by the world around us. It will send what we now call books through cyberspace to be printed locally or read on a device. It will send the information that once was gotten from books to handheld digital assistants and telephones. It enables things that were once sourced from books: the name of a restaurant in Paris or a map of the Tokyo subway, to be derived some other way, so that the owner of a Paris restaurant directory or a local Japanese cartographic company will have to find different ways to derive compensation for the value they provide.

We will be slowly, but surely, dismantling our existing infrastructure. There will be fewer bookstores, printing plants, warehouses, and reps on the road every year from now on. In no case will shedding these costs be cost-free. It will cost us to cut back and dispose of what we have built over time. It will eat into margin.

At the same time, the author, agent, publisher, and bookseller of the future — we believe the author, agent, publisher, and bookseller of 2010 — will be building a new infrastructure to exploit the broader new technology infrastructure growing up all around us.

The successful author today knows how to write a snappy book proposal that will produce a big enough advance to enable her to write the book.

The successful author of tomorrow will probably have a business plan for a book, which relates to existing Web sites and which enables her to produce revenues beyond her royalties for the intellectual property she produces or through the fame and recognition it produces for her.

The successful agent today knows the editors at all the publishers, stays in touch with their needs, interests, and internal procedures, knows how to get their attention and to make them pay, and can negotiate a book contract, playing off knowledge of what one publisher will do against another, confident that the important points are known when the contract is negotiated.

The successful agent of tomorrow will know how to get money from Web sites, perhaps in smaller or more incremental chunks than we’re used to seeing today. That agent will also know how to launch a book without a publisher on the Web and in ebook form, often getting sponsorship from a commercial or informational Web site. And the agent and author are going to need a more sophisticated financial arrangement than they have today, reflecting the increased importance of agent’s investment in an author’s success.

The successful publisher today knows how to maintain relationships with sources of supply, which usually has meant agents, identify the right books, pay advances that match eventual sales achievements, and manage the complex logistics of delivering a good physical product at an efficient price and then gaining placement and making delivery to a wide variety of points of distribution while, at the same time, marketing through media to the book’s audience.

The successful publisher tomorrow will deal with an exploding range of intermediaries, but they will be on the Web. The publisher of tomorrow will have a much more complicated business proposition as well. The price for shedding the large capital investment of a big centralized printing will be the requirement to understand proliferating distribution forms: centralized and local print-on-demand and various ebook and delivery-to-handheld formats. The much larger number of intermediaries for books themselves and exploiters of rights for various fragments will require marketing savvy and command of systems, no matter how much heavy lifting is outsourced.

The successful bookseller today knows the books and knows his customers. Knowing the books includes knowing how to get them, but at least we know what the books are: the books deemed in-print by an authority like Whitaker, BookData, or Bowker. Knowing the books also includes having staff that knows what is inside the books, able to direct a customer to the right book by getting a picture of the entertainment or informational need.

The successful bookseller of tomorrow will probably choose between a focus on the front end, directing customers to what they want, or a focus on the back end, delivering them what they have chosen. The two will work together, with a lot more of the former than of the latter. And neither of them will know the comfortable boundaries of today’s in-print authorities. When most books are delivered electronically, whether for ebook reading or for print-on-demand, chunks of what we now call a book will be delivered with chunks from other places. That will escalate the challenge at both the ends of the booksellers’ business.

The trick for all of us, no matter of which of these we are, is to get from what makes us successful to day to what is required to succeed tomorrow. The paths to survival over the next 10 years are not easy and they are not clear. We have assembled a bunch of very bright people here today who are already inventing the future from their particular vantage point in our business. We hope to start shedding a little light on the journey we have before us so we all have a little bit better idea of what have to look forward to in the decade to come.

Here’s the choice facing publishing enterprises. You can have profit and cash flow today, or you can have survival tomorrow. It is increasingly unlikely that you can have both.

And that actually understates today’s strategic planning dilemma a little bit because investing today’s profit and cash flow in your future won’t actually assure your enterprise’s survival. Not doing so will, however, assure its demise within the next 10 years.

Why is that? It is because the publishing of 10 years from now won’t look anything like the publishing of today. Many authors and authoring institutions will develop their markets on the Web long before they write a book. Because of the impending ubiquity of the ebook and print-on-demand, self-publishing options will become commercially viable. Centralized press runs with subsequent distribution will become the exception, not the rule. Most of the biggest players in the subsidiary rights process will be Web sites that don’t exist today, and they’ll be purchasing those rights through automated procedures that also don’t exist today.

More books, however we then define them, will be sold through the Web than in stores, and they’ll be presented to the public through literally millions of Web sites, the preponderance of which don’t exist yet. Most of these Web sites will be affiliated with central fulfillment sites, and the players in that sphere might include already-familiar names like Amazon and Barnes & Noble and Borders and even Tattered Cover. But that doesn’t reduce the degree to which marketing techniques and delivery modalities will change.

So most of the revenue is going to come to publishers through different channels than it does now. It will be sought with techniques and tools that don’t exist today.

And when we think about the many places where big publisher bucks go today: to warehouse and shipping operations, to pay for and manage book manufacture, to find authors through powerful agent relationships, to call on and maintain relationships with terrestrial retailers, we can see that most of the expenditure will soon be different too.

So how closely will the successful publishing company or book retailer or book club of 2010 resemble the powers of the industry today? Not very much.

That there would be this much change expected within 10 years time is an unprecedented situation. And it leads to the strategic dilemma that today’s publishing-related enterprises find themselves in.

For over the next ten years, as part of the publishing industry, we will dismantle an old infrastructure and build a completely new one for the distribution of entertainment, information, and reference capability that has always been associated with printed books, magazines, and journals. Everything will change, including the commercial arrangements between author and publisher and between publisher and retailer. New roles will emerge in the value chain, particularly for aggregators and experts; roles that would have been too cumbersome to work in the current print-and-distribute world but which will work fine in a distribute-and-print world enabled by the Web.

Today’s successful enterprise, planning to survive and thrive in this new environment, will have to build its own new infrastructure. It will need a coherent vision of the future to do this and a dispassionate picture of which of today’s corporate strengths transfer into this future and which do not. It will need to compete with dot com companies which are financed to accommodate both the cost and the trial-and-error nature of infrastructure-building.

And it will have to recognize that it is on a mission to change itself into something unrecognizable by today’s lights so that it can exist in a landscape which will do the same.