Publishing as a business model. Seriously, Seth Godin?
Seth Godin is a smart guy. He got his MBA at Stanford and named one of his first companies Yoyodyne in a nod to Pynchon. His 10 marketing books have made various bestseller lists, and his blog is (currently) ranked by Ad Age as the #26 marketing blog on the internet.
So what was he thinking when he advised entrepreneurs today to eschew traditional funding streams -- banks and venture capitalists -- and go the publishing route?
It works like this: you have an idea, a fledgling business or a new market to enter. You find an amateur investor (a wealthy dentist, a retired executive) and raise the money to bring it to market. And in return? The investor gets $xx for every unit you sell. From the first one until forever.
No fancy bookkeeping, no board meetings, no worrying about the accounting. Instead, you pay a royalty on income. The rest is up to you.
Of course, this is exactly how the math of book publishing works. The publisher puts up money and keeps 80 or 90 percent of the income. You get the rest.
As elegant as this may sound -- no board meetings! No fancy bookkeeping! -- it's plain fantasy. Anyone who's ever published a book knows that the bookkeeping is fancy. And more important, everyone in publishing is becoming increasingly concerned that publishing, as a business model, isn't working.
One of the challenges facing publishing is that not all books are equal. A very few books sell very well; a few more make marginal profits; many never generate income at all. It's not much different from other creative industries, like music and film. Except that publishing historically created a mix in which the profits were modest, even wee -- rarely at the level that corporations expect. And in recent years, most publishers have been vertically integrated into a handful of corporations.
Then there are the bookstores, which are closing. And the online retailers, which are discounting. Ginormous unrecoupable celebrity advances. Archaic modes of delivery and returns. Readers going online -- scattering -- to get their content. Can books survive the online content boom? Will today's toddlers even give what we think of as a book -- the kind with covers and paper pages -- a second glance? How can the publishing industry go digital and avoid the piracy and swapping issues the music industry faced?
You don't have to listen to me go on. Here's New York magazine with the big picture (the story, from last year, includes comments like "It's a very trying time" from the president of Farrar, Straus and Giroux).
If publishing is the best model Seth Godin can think of, it seems like the real trick here is finding the willing investor. And for that, you'll need a couple of Max Bialystocks and Leo Blooms -- they were great at securing matrons with fat wallets in "The Producers."
-- Carolyn Kellogg
Photo: Seth Godin's book "Permission Marketing" discounted from $25 to $5.99 by Border's Books; the company laid off nearly 900 people between January and April 2009. Credit: wombatunderground1 via Flickr.