The corporate consolidation of publishing over the past two decades has finally maxed out. Borders is verging on bankruptcy; Barnes & Noble is closing stores; and major media conglomerates are closing imprints and ejecting talent faster than they gobbled it up in the 1990s. While this makes for some bleak headlines in the short term, it bodes well for the future of a publishing industry that operates on a scale more appropriate to the medium we're all creating and selling.
Publishing is a sustainable industry—and a great one at that. The book business, however, was never a good fit for today's corporate behemoths. The corporations that went on spending sprees in the 1980s and '90s were not truly interested in the art of publishing. These conglomerates, from Time Warner to Vivendi, are really just holding companies. They service their shareholders by servicing debt more rapidly than they accrue it. Their businesses are really just the stories they use to garner more investment capital. In order to continue leveraging debt, they need to demonstrate growth. The problem is that media, especially books, can't offer enough organic growth—people can only read so many books from so many authors.
So begins consolidation. In order to achieve the growth shareholders demand but the businesses can't supply, corporations embark upon mergers and acquisitions, even though, in the long run, nearly 80% of all mergers and acquisitions fail to create value for either party. The music industry is a prime example. In the 1990s, when Sony could no longer demonstrate growth commensurate with its share price, it bought Columbia Music. At the time, newly invented CDs were selling briskly and at margins higher than vinyl records. This was because baby boomers were replacing their record collections. Once that surge ended, artificial growth turned out to be negative growth. The centralization of recording companies and labels under a few corporate giants, meanwhile, favored the rise of large distributors and retailers and the decline of local, specialized shops. Blame Napster if you must, but the truth is that the retail music industry no longer had anything to offer that the Web couldn't.
The same thinking led the conglomerates to hone in on publishing. Top-heavy, centralized bureaucracies know how to work with a B&N better than with a Cody's or a Spring Street Books. And they applied their generic corporate management to a ragtag crew of book nerds, most of whom wouldn't—and shouldn't—know a balance sheet if their lives depended on it. Finally, unable to grow as fast as their debt structures demanded, these corporations have resorted to slashing expenses.
Over the past year, we've watched venerable imprints fold into one another and great talent be almost randomly ejected. Knopf's revered name is now subject to the corporate-speak of “Knopf-Doubleday.” HarperCollins created Collins, then crossed it off the spreadsheet, in the process booting Brenda Bowen's children's imprint; one of the most talented publicists in the industry, Larry Hughes; and the brilliant Gillian Blake, whom they had just snatched from Bloomsbury. Doubleday closed Morgan Road and lost an irreplaceable asset: one-woman publishing-powerhouse Amy Hertz.
Along with the publishing houses, the megaretailers designed to profit off now-failing centralization are also beginning to feel the pain. Book depots just can't sprout at the rate of Wal-Marts—besides, Amazon already does the centralization thing better than any brick-and-mortar business. Thus, the talented staffs of the superstores (meaning the talented former staffs of the independents) are also being cut loose, region by region.
The good news is that much of this talent—book editors, publicists and sellers—is ready to rebuild what Wall Street has seen fit to destroy. Book enthusiasts are not giving up. I get e-mails constantly from editors asking if I'm interested in writing books for their new, independent publishing houses. Many offer smaller advances but higher royalties and more attention to details—like the quality of my writing. I also get correspondence from people opening independent bookstores in the shadows of vacant outlets, stores that would be happy with a hundredth of the sales volume that made their larger counterparts unsustainable.
Behind the bad news, there is much to look forward to. Our industry has for too long favored those skilled at negotiating the corporate ladder and punished those who simply publish great books. Now that publishing has revealed itself to be a bad growth industry, it is free to rebuild itself as the vibrant, scaled and sustainable business the reading public can support.
|Douglas Rushkoff is the author of Life Inc: How the World Became a Corporation and How to Take It Back.|