Books, Books Everywhere

Stolen from the FGPress.com home page

The future of publishing is in the hands of the authors

This morning word broke that my friends at Foundry Group had launched FG Press. As someone who has worked in the publishing space for the past four years it’s been exciting watching the evolution of publishing and how technologists view their ability to fix the apparent inefficiencies.

Publishing Ecosystem:

It’s important to understand how the publishing ecosystem is formed with three real tiers (please marvel at my drawing on my iphone skills):

At the bottom of the pyramid lives the largest group: the self-publishers. The total number in this group is somewhere between 500,000 and 1,000,000 and depending on what you consider self-publishing is a rapidly growing segment as people realize that they can be authors.

The second group: the mid-tier publishers number in about 50,000 and are dying or becoming extremely niche. The cost of printing is growing, and the number of bookstores is dropping. The time when an indie book publisher could command premium space in a bookstore is disappearing, and most don’t have the infrustructure to support content acquisition as well as distribution.

The final, and smallest group, often known as the Big Six, command the lion’s share of the market.

Why Publishers Matter:

What value does a publisher provide? Three distinct areas of support: Marketing, Production and Distribution.

Marketing:

Most publishers will provide a marketing budget by title. That budget depends on the potential revenue of the title, which is driven by the platform (social and traditional) the author brings as well as the market potential. Obviously, this is the key reason authors are interested in working with the Big Six, they have larger budgets.

Production:

Printing books isn’t cheap. Economies of scale matter, and more than 60% of book sales are still paper.

Distribution:

Publishers have access to bookstores and usually have deals with the major eBook marketplaces (Apple, Amazon, Nook and Kobo. And 200 others that don’t really matter.)

Why Publishers Don’t Matter:

As marketing has moved from traditional to digital, and margins have shrunk from increased production costs and lower physical sales (remember a paper hardback could retail for $30, whereas an eBook is $12), marketing budgets have become restricted to a few major titles per year.

It’s just almost impossible for an unknown author to get a significant marketing budget.

(BTW, I am completely ignoring things like licensed content.)

Almost 40% of all books sold are now digital. Bookstores are slowly, but surely, dying. Digital First has become more and more common place, and printing books has, in many ways, become the after thought, and distribution to the dwindling number bookstores less important.

Which brings us to distribution. While publishers like to pretend that they control the books that are highlighted by the digital marketplaces. This is perhaps one of the biggest fallacies in eBook marketing and promotion. The marketplaces now rule, and more than that, Amazon and Apple rule.

If they feel that the content provided by the publishers will sell well (remember, everything is now tracked), they will promote it. Otherwise, they just don’t care. (That’s a little melodramatic. Both companies care deeply about the content they sell and promote. The difference is they know exactly what will work and what doesn’t, and because of the speed at which a digital marketplace can operate, decisions can be made equally fast.)

(As a side note, at Graphicly, we have helped authors and publishers sell millions of books. At this point, we certainly understand the dynamics of the marketplaces, but still can’t, with much accuracy, predict what will sell and what won’t. 50 Shades of Grey? An S&M Twilight fan fiction book from New Zealand? Who knew that it would bring $140,000,000 in profit to Random House last year.)

But What Does It All Mean?

It’s easy to say, as us startup people often do, that publishing is ripe for disruption.

But it’s not. The market dynamics are shifting to where the need for six (now 5 with the merger of Penguin and Random House) major publishers and tens of thousands of mid-tier publishers is necessary for the existence and growth of quality content.

We don’t need publishers to market for our authors, we can leverage current network effects in digital and social media. We don’t need to produce paper books. We can print on demand, or do small runs based on pre-sales. We don’t even need advances with the explosion of crowd-funding sites like Kickstarter and IndieGogo (right now there are 16,000 publishing projects on Kickstarter). We certainly don’t need publishers to distribute, given that at current growth rates, the vast majority of books will be sold digitally (I estimate 80% within 3-4 years).

FG Press

Which brings us to FG Press. Is it a good idea? Will it work?

With all the discussion of disruption and the mechanical and tactical support that publishers bring, there are two distinct values: time and quality.

If an author has to only worry about creating awesome content, and has someone that can filter out the crap, the output of the author will be of high quality and intrinsic value.

FG Press believes that they will be able to provide that value by the creation of community around authors and readers.

We operationalize this through simple contracts, guidance, and support within a community of writers. These writers work together as part of an extended network, with us, to develop the best content for a specific audience of readers. We then connect readers and writers together in a relationship that goes well beyond the printed page.

This has been successful at companies like Whattpad, Byliner and others, and in terms of a “next-gen” publishing house, could very well be the “missing link” between the output of the Big Six and the vast amount of schlock of most self-publishers.

In an industry driven by hits, this is a very difficult act to pull off. The process of recruitment, filtering, editing and selling is often more art than science and the application of technology may not be enough of a “game changer” on its own to significantly shift the industry.

Yet, I cannot be more excited that Brad, Jason, Seth, Ryan and Dane are taking the shot. Publishing must change. Stories must no longer be stuck behind antiquated and archaic business processes.

We are all story-tellers. It’s time sharing the story was as easy as telling it.