Back in 2009 I wrote my Master thesis about the optimal way to publish a debut novel in Switzerland using business strategy tools. I had a raw draft of my first novel in my pocket and slowly started to think about how to get it out there. The thesis was accepted and I got my MBA, but I was wrong about my conclusions - not back then, but in retrospective. Well, maybe even back then.
Synopsis of my thesis
Amongst other results, the analysis showed an expected further concentration in the publishing industry and an erosion of margins. It also predicted an overflow of manuscripts in the market based on the possibilities of the digitalization.
Basically, I developed two strategy options:
- To create a pull via social media in order to overcome the lack of publicity and find a publisher as a second step
- To go the self publishing route using digital media solutions
Later, I abandoned the second option due to the expected erosion of margin as well as the lack of experience as a debut novelist with regards to the end-to-end publishing process.
How it developed in the meantime
At the time I wrote my thesis, e-book readers were still in their fledgling stage. Kindle 2 and Nook had just been released and back then in Europe they still had the nerd-factor. But the real revolution was the introduction of KDP in the US, cutting out the middle men and gatekeepers. However, KDP was not released in Switzerland in 2009.
The expected concentration took place. There is this wisdom in business that every industry will consolidate until 7 +/-2 competitors control 80% of the market. Starting in the 1960 the book publishing industry saw a consolidation down to the current big five. Then the technological development disrupted the market. Recent statistics from Author Earnings indicate that only a third of e-book sales are the big five and over 40% are self or indie published. Obviously this is only for e-books, however based on Nielsen, e-books made 30% of overall book sales in first half year 2014.
At the same time, we've seen major bookstores like Borders disappearing and Barnes and Nobles stalling mainly due to the increasing competition through channels like Amazon. Interestingly, small independent bookstores seem to be more resistant than I originally expected.
However, while digitalization led to concentration in channels, it also led to a higher variety in content and worked as a catalyst for small businesses. As every other entrepreneur, independent authors need suppliers during different steps while creating an e-book, from editing, design services to marketing and consulting.
You might say the gatekeepers have been watching quality and with their falling the quality is at risk. Well, I would say quality is now defined by the market - I call it voting with the wallet. About a year ago I bought a book from an independent author in Wyoming. He was a park ranger at Yellowstone and wrote a thriller about a terrorist attack with a potential natural disaster. The story was ok with a nice plot twist, but there was far too much back story in it. His knowledge about the park was his darling and he wasn't willing to kill it. Honestly, I don't remember the author and I probably won't buy another book from him. The quality was just not good enough. However, the amount spent was low enough it did not really hurt.
Why should I have seen it coming
Well, I was right in some aspects, like the margin erosion, but I didn't realize it would hit more the publishers than the authors. I also didn't consider the additional additional sales due to the lower prices and the increased availability of the digital content.
But I was wrong about some other major aspects.
When I wrote my thesis I was focusing too much on the impact of digitalization on the creation of content and the use of existing social media. I should have seen that the real change will be in the distribution. Other industries had similar changes, from retail via tourism to news. I also did not consider the potential of additional online tools, like goodreads or bookbub.
I have not seen all this, because... well, because I have no crystal bowl. But some of it would have been foreseeable by having a more open mind and include broader basis of interviewees, rather than focusing on publishers, bookstores and authors. They tended to be too much focused on threads and not seeing the opportunities of the digitalization.
I also should have taken a look at the US. Europe, except maybe the UK, tend to adopt change later than the US.
Quo Vadis Writing
That's the question. Over the next blog posts, I will try to give an outlook where the industry will go. This time I'm going to focus on one topic or aspect at a time, from content creation via distribution to marketing and sales. Probably I'll still be wrong, but once in while it's healthy to try to look ahead.
In that sense, happy scrying,
Your writer in a foreign land