If “Wild West” and “Discoverability” have been buzz words of BEAs past, “Scale” is certainly a strong contender for this year’s theme. Size and scale certainly come to mind when looking at the ever-increasing offerings and co-located events supplement the BEA exhibit hall, from IDPF and bloggers conferences to library tracks and author events. Size and scale especially seemed like relevant points of discussion at the Publishers Launch BEA conference, as they address some of the elephants in the room: what is going to happen once Random House and Penguin becomes one mega-publisher? How are publishers dealing with Amazon now that it’s not only the leading book retailer but making the moves to become a major publishing outfit? As a result, much of what was covered at Publishers Launch BEA, held Wednesday, May 29th at the Javits Center, centered on whether or not size will really matter and what the behemoths of the industry, which only seem to be getting bigger, mean for everyone else.
For agents on a panel about consolidation, much is still up in the air. While no one said that they believed consolidation or rapid growth in agencies will be the solution to counterbalance the large companies potentially getting larger, they did agree that scale will matter. Size is not the only factor that defines the scale of a company, but its weight and influences, as well. Two publishers becoming one means that there will be one less option to leverage an author against another. The question of size also translates to authors. As Brian DeFiore of DeFiore and Company pointed out, “A mega-company needs mega-authors to survive,” meaning that agents “need major clients more than ever.” Robert Gottlieb of Trident Media agreed, talking about how consolidation will possibly mean bigger incentives for bestselling authors, but may make it even harder for mid-list authors who are struggling; agents might be less inclined to stay with clients through rough times.
Random/Penguin also means the publishers will have greater resources to finally breach some barriers the industry has repeatedly come up against. Idea Logical‘s Mike Shatzkin predicted that Random/Penguin will finally be able to create a successful subscription service, which had previously been impossible due to “agents not wanting to transfer the power of the author to the subscription manager.” The possibilities of a consolidated company were also highlighted in the business development panel, moderated by Market Partner International‘s Lorraine Shanley, that discussed how these departments finding areas of strategic growth in partnering with new companies and business opportunities.
Dealing with Amazon
On the retail side, Amazon also came up often in reference to their not-so-secret adversarial relationship with publishers. Former Macmillan President Brian Napack highlighted the conflict of interest between the two, succinctly explaining that Amazon manages the customer and publishers manage the author, and as those two move into one another’s spaces, friction is bound to occur. This was a sentiment echoed by Scott Hoffman at Folio Literary Management who said his philosophy has been that “you don’t get rich selling books to publishers, you get rich selling books to people.” Still, Michael Cader explained that Amazon having almost no margin will make it hard for publishers to compete as their margins increase. Mike Shatzkin agreed that costs need to go down but ideas can be large: “For publishing as an industry, [find a way to] make it smaller. For publishing as a function, make it bigger.”
Overall, when talking about scale, many of the presenters emphasized that companies in all aspects of the business will have to be, (in the words of Brian Napack), “laser-focused on what you do really, really well.” F+W’s David Nussbaum demonstrated how the company’s shift in focus to its core competencies of content, community, commerce, and curation led to its 38% growth in the last 3 years. According to Hachette’s Ken Michaels, it is this combination of innovation (on the side of content) and execution (in delivering that content to consumers) that creates scale.
References to size didn’t just stop with the Publishers Launch conference. Just down the hall at IDPF, Malcolm Gladwell gave a speech, titled after his new book but apt nonetheless, about “David and Goliath” in which he talked about the need for book businesses to cut out less effectual, larger money pits and to instead focus on more functional, localized branches/businesses. While perhaps not a prescription across the board, it does reflect Robert Gottlieb’s observation that publishing is moving to a place where it will be very top and bottom heavy, with little options for mid-level companies. Davids and Goliaths may be in battle, but those in between are perhaps the ones to watch.