[tt] end of the book business as we know it

[Eugen Leitl]

http://www.printthis.clickability.com/pt/cpt?action=cpt&title=The+End&expire=&urlID=30999843&fb=Y&url=http%3A%2F%2Fnymag.com%2Fnews%2Fmedia%2F50279%2F&partnerID=73272

The End

The book business as we know it will not be living happily ever after. With
sales stagnating, CEO heads rolling, big-name authors playing musical chairs,
and Amazon looming as the new boogeyman, publishing might have to look for
its future outside the corporate world.

    * By Boris Kachka

    * Published Sep 14, 2008

HarperCollins occupies floors 1 through 22 of a giant steel-and-glass box on
53rd Street. But up on 26, the receptionist for a tiny offshoot of the
company sits alone, gatekeeper to a few drab rows of empty cubicles. A glass
container on a table holds a mysterious pile of bright-yellow lightbulbs.

“Welcome to our temporary home,” says 51-year-old publisher Bob Miller,
ushering me into a colleague’s more inviting office. Inside, he and his
staffers prepare to impart a cheery message: They’re going to fix publishing!

But first, a horror story. Debbie Stier, Miller’s No. 2 at HarperStudio (as
this little imprint is called), has been collecting videos for their blog.
“You want to see what happens to books after they go to book heaven?” she
asks. On the screen of her MacBook, a giant steel shredder disgorges a ragged
mess of paper and cardboard onto a conveyor belt. This is the fate of up to
25 percent of the product churned out by New York’s publishing machine.

Everyone’s eyes widen, as though watching some viral YouTube gross-out. “It’s
like Wall-E,” says marketing director Sarah Burningham. “It’s depressing,”
Miller adds. They had sent in a Flip camera with a warehouse worker. “You can
see our books go through there,” says Stier. “The Crichton, the Ann
Patchett.”

Miller recently left Hyperion, which he founded seventeen years ago, to start
his own imprint at the urging of HarperCollins’s then-CEO, Jane Friedman. She
was replaced in June, but HarperStudio lives on. For all its ambitions, it’s
a modest outfit: Miller and three women, two of them in their twenties, hope
to publish two books a month starting next May, having convinced 25 authors
to forgo big advances in return for half of their books’ eventual profit. The
books they’ll be doing aren’t particularly outré—Emeril Lagasse on grilling,
50 Cent is collaborating with The 48 Laws of Power author Robert Greene—but
they’re hoping that their process will be revolutionary.

Over the past few weeks, Stier has turned her own Flip camera on friends and
colleagues, asking them to hold up those yellow lightbulbs and share their
“bright ideas” on publishing. She plays us a few of the clips, including one
of a publicist who delivers Stier’s intended punch line, tentatively: “Have
fewer authors and sell more books?” But the suggestion that gets the biggest
laugh in the office is from Stier’s 12-year-old son, who says, “So maybe you
have to turn all the books into movies so nobody has to waste their time.”

“It is a very trying time. I’m kind of down about it myself.” —JONATHAN
GALASSI, PRESIDENT OF FARRAR, STRAUS AND GIROUX

The demise of publishing has been predicted since the days of Gutenberg. But
for most of the past century—through wars and depressions—the business of
books has jogged along at a steady pace. It’s one of the main (some would say
only) advantages of working in a “mature” industry: no unsustainable highs,
no devastating lows. A stoic calm, peppered with a bit of gallows humor,
prevailed in the industry.

Survey New York’s oldest culture industry this season, however, and you won’t
find many stoics. What you will find are prophets of doom, Cassandras in
blazers and black dresses arguing at elegant lunches over What Is to Be Done.
Even best-selling publishers and agents fresh from seven-figure deals worry
about what’s coming next. Two, five years from now—who knows? Life moves fast
in the waning era of print; publishing doesn’t.

So what’s causing this, exactly—this inchoate dread that’s suddenly turned
“choate,” as one insider puts it? The anxiety would be endurable if it was
just a function of the late-Bush economy: Sales at the five big publishers
were up 0.5 percent in the first half of this year, bookstore sales tanked in
June, and a full-year decline is expected. But pretty much every aspect of
the business seems to be in turmoil. There’s the floundering of the few
remaining semi-independent midsize publishers; the ouster of two powerful
CEOs—one who inspired editors and one who at least let them be; the desperate
race to evolve into e-book producers; the dire state of Borders, the only
real competitor to Barnes & Noble; the feeling that outrageous money is being
wasted on mediocre books; and Amazon .com, which many publishers look upon as
a power-hungry monster bent on cornering the whole business.

One by one, these would be difficult problems to solve. But as a series of
interrelated challenges, they constitute a full-blown crisis—a climate change
as unpredictable as it is inevitable. And like global warming, it elicits
reactions ranging from denial to Darwinian survivalism to determined stabs at
warding off disaster—attempts not to recapture some long-lost era but to
harness new, untapped sources of power. That is, if it’s not too late.

Next: The mom-and-pop shops of publishing's heyday.

Courtesy of Harper Studio)

“Flat is not an acceptable position. We are always expected to grow.”
—CAROLYN REIDY, CEO OF SIMON & SCHUSTER

In its heyday, publishing was a vast array of mom-and-pop shops, in which the
pops tended to be independently wealthy. Their competitive advantage was not
efficiency or low costs but taste. Maxwell Perkins at Scribner; Bennett Cerf
at Random House; Roger Straus and Robert Giroux at Farrar, Straus and Giroux;
Barney Rosset at Grove; and Alfred A. Knopf epitomized the gentleman editor
as gallerist, snatching up unknown geniuses. One British publisher advised an
American at the time: “Take lots and lots of gambles, but small ones.” So
they did. They took poor writers drinking, put them up in their homes, and
defended them in court. They made handshake deals, spent their personal
wealth in lean years, and built backlists out of modernist classics.
Discovering Faulkner was like buying Picassos in 1910.

In the early sixties, Knopf sold out to Cerf, who sold Random House to RCA,
and the era of consolidation began. Formerly independent publishers shriveled
into mere imprints of massive corporations. Knopf became part of Random
House; so did Doubleday and Bantam and Ballantine and dozens of still smaller
shops now distinguished mostly by their names, like corporatized Broadway
theaters bearing the monikers of long-gone cigar-chomping producers.

By the nineties, five big conglomerates were divvying up the spoils and their
lucrative backlists. Many of the smaller companies that had been struggling,
like FSG, Ecco, and Crown, were flush with corporate resources. But in
exchange, they gave up final say in how they’d publish their books—or even
what books they’d publish. And suddenly an industry accustomed to 5 percent
margins was being run by media moguls aiming for double digits.

The corporations began by doing what they knew how to do: acquire, expand,
diversify, spend. Sign up all kinds of writers, pay some of them a ton,
market the hell out of them, see what sticks. It was the nineties, after all.
A few books sold spectacularly, but more failed, and in the last ten years,
the bill has come due. So today, the order comes down from beleaguered CEOs:
More blockbuster books, fast. Which leads to cutthroat auctions and
ballooning advances. You can’t win big if you don’t bet big.

Lately, the whole, hoary concept of paying writers advances against royalties
has come under question. Following their down payments to authors, publishers
don’t have to pay a cent in royalties, which are usually 15 percent of the
hardcover price, 7.5 for paperbacks, until that signing bonus is earned back.
The system is supposed to be mutually beneficial; the publishers guarantee
writers a certain income, and then both parties share in the proceeds beyond
that level. But it only works for publishers if they’re conservative in their
expectations. As auctions over hot books have grown more frequent, prudence
has gone out the window— paying a $1 million advance to a 26-year-old
first-time novelist becomes a public-relations gambit as much as an
investment in that writer’s future.

That money has to come from somewhere, so publishers have cracked down on
their non-star writers. The advances you don’t hear about have been dropping
precipitously. For every Pretty Young Debut Novelist who snags that
seven-figure prize, ten solid literary novelists have seen advances slashed
for their third books.

Of course, back in the boom nineties, the corporations themselves were
pumping up the expectations of midlist writers. Consider Dale Peck. His first
novel, Martin and John, came out in 1993 to excellent reviews, and by his
third book, in 1998, he was, by his own account, wildly overpaid. Books, he
says, “were like Internet stocks, getting enormous advances without
demonstrating any moneymaking whatsoever.” Having rarely sold more than
10,000 copies, he took up with superagent Andrew Wylie, developed a
reputation for being a “diva,” and pretty soon couldn’t sell a book to save
his life. Until he started specializing in genre fiction—first children’s
books, then horror. Last year, Peck sold Body Surfing, a thriller about
demons exiting people through sexual release. He’s now splitting $3 million
with Heroes writer Tim Kring to produce a trilogy of conspiracy thrillers.

Peck sees an increasingly hostile environment for the kind of books he used
to write. “When you get $100,000 for a novel,” he says, “you want $150,000
and then $200,000, so when they pay you $25,000 for the next one, and my rent
is $2,500 a month, what do you do? The system works just fine for commercial
fiction. But for literary fiction, I think we had a nice run of it in the
commercial world.”

The good fiction that does manage to snag a stratospheric advance is mostly
either a follow-up to or a knockoff of a freak hit. The astonishing success
of Chliable franchises. Dan Brown’s The Da Vinci Code buoyed Random House
tremendously in the past five years, but with Brown’s sequel delayed, sales
were down 5.6 percent last year. When Simon & Schuster announced that sales
were off almost 10 percent in the first half of ’08, it cited the 2007
success of The Secret as the reason for the relative shortfall. Other
companies did better—but on the strength of surprise hits. Sales grew 11
percent both at Penguin and at Hachette’s U.S. division, largely on the backs
of two authors—Oprah-touted self-helper Eckhart Tolle at Penguin and
Stephenie Meyer at Little, Brown.

Morgan Entrekin remembers meeting Larry Kirshbaum, then-CEO of Time Warner
Books, right after two of Kirshbaum’s books had been anointed by Oprah in
1999. “It’s like winning the lottery twice,” says Entrekin, “but Larry didn’t
seem that happy. He said, ‘Now my bosses are going to expect me to do better
next year.’ ’’ Kirshbaum eventually left to become an agent.

“If someone like Jane Friedman can’t survive the industry, who can?” —AN
EDITOR AT A HARPERCOLLINS RIVAL

The ideal publishing CEO can “read vertically and horizontally,” in the words
of ex-Penguin CEO Peter Mayer. But even those who clearly can do both, like
Jane Friedman, seem powerless to keep their bosses happy. Friedman had an odd
retirement party. It was thrown not by her former employer, HarperCollins,
but by her rival and close friend, Doubleday publisher Steve Rubin. The
turnout for mid-August was impressive: Power agents Amanda “Binky” Urban and
Mort Janklow and legendary editors Sonny Mehta, Gary Fisketjon, and Dan
Halpern all converged on Rubin’s elegant roof deck off Central Park West.
They surprised the guest of honor by wearing disturbing Jane Friedman masks.
Friedman herself gave a defiant speech insisting that it wasn’t a retirement
party at all. “Books mean civilization,” she said, perched on iron steps that
resembled a barricade from Les Misérables. Later she proclaimed, “I am not
done, and I am not done l old days but rather its postmillennial media- and
tech-savvy era. She came up through publicity at Random House, and over a
decade as CEO, she turned HarperCollins from a floundering beast into the
business’s tightest, shiniest ship. She also attended personally to writers.
She had such a good relationship with Michael Crichton that he followed her
from Random House to HarperCollins. Yet a few days after being the belle of
the industry’s annual confab, BookExpo, held in L.A. last spring, she went
into Rupert Murdoch’s office and was told that her own protégé, Harper No. 2
Brian Murray, was replacing her. As one editor puts it, “She went over there
thinking they were going to discuss [her] contract, and instead she got a
two-by-four across the face.”

Friedman was never known as a gentle soul, but her brutal “resignation”
spooked the industry. What exactly had she done to deserve this?
HarperCollins’s recent numbers were down but had recovered reasonably by
June. With both parties refusing to comment, theories abounded, the most
plausible of which is that Murdoch thought she had become more noise and
trouble than she was worth, running a part of his conglomerate that,
relatively speaking, isn’t worth all that much to him. There was her messy
dismissal of Judith Regan following the O. J. debacle—a tabloid event that
dovetailed too well with Friedman’s reputed love of publicity. Murdoch,
people at the company say, didn’t like seeing Friedman’s name all over the
papers.

Next: The complex proposition of maintaining marquee writers.

Murray looks to be a less conspicuous character. He promises to continue
Friedman’s innovations, and to accelerate a worldwide expansion of the
business. “We have a green light from News Corp. to invest in our business,”
he says. Friedman, meanwhile, is said to be mulling an Amazon consulting gig.

The new face at the top of Random House, who replaced Peter Olson as CEO the
week before Friedman left, is 40 and has never worked in book publishing
before. Markus Dohle, a veteran of Bertelsmann’s printing business, cuts
quite a different figure from, say, dapper, laconic Knopf editor Sonny Mehta,
a man who’s survived many a CEO and is said to have shrugged comically when
he found out—via the New York Times—that Olson was out. “It’s like Dohle’s 27
years old: He sort of bounces on the balls of his feet the way college
athletes do,” says one longtime industry observer.

Dohle has spent the last three months on a listening tour, and his subjects
nervously await the results. So far, many prefer his demeanor to that of
Olson, a man whose voracious reading failed to make up for his coldness (an
in-house joke was that he was a Swede pretending to be a German). But
managerially, Olson had one saving grace. “He left people alone,” says the
industry observer. “But [Dohle] doesn’t come out of a tradition of editors as
geniuses who need to be left alone in a room to smell manuscripts and decide
on them.”

Random House had a weak 2007, and publishing sources say Olson didn’t do
enough to eliminate its endemic inefficiencies. Imprints are still allowed to
bid against each other for books, thus driving up prices, and every one of
them has a major problem or two. Little Random has been without an official
editor-in-chief since Daniel Menaker left last year. Doubleday, post–Da Vinci
Code, is overextended. And two of Random’s down-market imprints, Crown and
Bantam, are said to have dragged down past earnings; Bantam Dell head Irwyn
Applebaum is a frequent object of anticipatory Schadenfreude. “When business
is slow, tongues are fast,” responds Random House spokesman Stuart Applebaum,
Irwyn’s brother, declining a request to speak to Dohle and calling the
speculation “fantasy-league Random House.” He says there is “zero change” at
the imprints, and that Bantam “consistently delivers some of the company’s
biggest-selling hardcovers and paperbacks.”

Dohle has been popping into editorial marketing meetings, something Olson
almost never did. At the end of July, Mehta brought Dohle as a surprise guest
to a Knopf meeting. Looking over a sales spreadsheet, he muttered to Mehta,
“This isn’t how the other imprints do it.” Editors who were called in during
the meeting hadn’t all been told Dohle would be there. One such editor,
herself a former executive, said of a book with disappointing sales, “It’s
dead in the water. Don’t worry about it.” Another person in attendance says,
“You could see Dohle’s eyebrows going, ‘Oh boy, that was candid.’ ” What was
his take on the proceedings? Where would these little observations lead, and
how would they affect the people in this room? No one yet knows.

“I think agents often like for there to be problems, because they can be the
stalwart support behind a writer.” —GARY FISKETJON, KNOPF EDITOR

The blockbuster era makes retaining marquee writers an increasingly complex
proposition. Back when Grove’s Barney Rosset was boozing around Paris with
Samuel Beckett, agents were adjuncts, the ones who handled the details (in
fact, Rosset became Beckett’s agent too). The editor, both best friend and
midwife to genius, had it made. The pay was awful, but what company! And all
in the service of art. “We publish authors, not books,” FSG’s people like to
say—and for decades, through best sellers and duds, great writers and
prestigious publishers were inseparable. Some still are: Philip Roth, thus
far, has stuck by Houghton Mifflin even after its painful merger with
Harcourt. John Updike, at Knopf, doesn’t even have an agent. But early this
year, two of publishing’s tightest bonds were broken. Richard Ford left
Knopf’s star editor, Gary Fisketjon, for Dan Halpern at Ecco (Binky Urban,
the agent who handled Frazier’s deal, did this one, too). And, after 42 years
at FSG, Tom Wolfe left for Little, Brown.

Fisketjon, renowned for his close friendships and even closer edits (Raymond
Carver, Cormac McCarthy, et al.), was more than Ford’s editor—he and the
novelist “would kill furry animals in the woods together,” as one colleague
puts it. But doing business together had become tricky. Ford’s literary
reputation and popularity had fallen out of alignment; his last book, The Lay
of the Land, sold less than 100,000 copies, per BookScan. Slow-and-steady
Knopf didn’t seem fazed, but the author himself was. He thought house
enthusiasm had waned, and “he never felt the money was commensurate with the
work that was produced,” says the colleague. It couldn’t have been easy when
the Lauren Weisbergers of the world were getting better deals than he was.
“He’s 64, looking for that one last score in the literary world.” Knopf
offered Ford roughly $750,000 per book, at which point Mehta capped the
money, according to the source; Ecco offered $3 million for three books.

Next: The sinking morale of editorial staffers.

Others say that Ford had simply grown unhappy with Fisketjon’s editing.
Cormac McCarthy left Fisketjon, too, but he stayed with Knopf and had Mehta
edit him. When Ford decided to leave, says the source, he left Fisketjon a
phone message explaining his move. It was never returned. He sent a follow-up
e-mail, which Fisketjon answered with a surly note. Only Ford and Fisketjon
know what exact words were exchanged (and both refuse to comment on their
relationship after the move), but Ford later told someone that “Gary has to
learn he’s no longer in high school.” This was business, after all.

Tom Wolfe kept FSG afloat in its last decade of independence with The Bonfire
of the Vanities, but Jonathan Galassi shrugs off making him a lowball offer
earlier this year. Little, Brown paid about $7 million for his next novel, a
Miami race parable, after Galassi reportedly balked at an early request for
$5 million. “We went through a court dance,” says Galassi. “Everyone acted
their part, and the result could have been predicted from the beginning.”

Wolfe says his divorce was cordial, noting that 42 years is a lot of
loyalty—which, by the way, is a two-way street. “Making a living as a writer
is much more like Protestantism than Catholicism. In the Catholic Church you
built up your bank account through some good works, even if you’ve had
terrible sins.”

A close friend of Wolfe’s says it wasn’t about Galassi, it was about Roger
Straus, the charismatic old-line chairman of FSG who died in 2004. After
Bonfire, Random House had offered Wolfe millions to leave Straus, but he’d
refused. With his old friend gone, Wolfe relied on his most trusted surviving
confidante: his agent, Lynn Nesbit.

Writers looking for a boost from a new publisher would do well to remember
the cautionary tale of one Salman Rushdie, exhibit A in the case of Editor v.
Agent. Sonny Mehta was his editor; they shared virtually identical tastes and
backgrounds, and each had helped the other’s career. Enter Rushdie’s agent,
Andrew Wylie, in the late nineties, pitching what would become Rushdie’s 1999
novel, The Ground Beneath Her Feet. “Wylie held Sonny up,” says a publisher
at another house. “Sonny said no and [Wylie] said, ‘Well, cheers, we’re
leaving.’ Despite low sales of Rushdie’s previous novel, Holt paid $2 million
for the new one (plus some paperback rights). It promptly tanked. Rushdie
eventually returned—not to Knopf but to Little Random. His career has never
been the same.

Many agents contend that, with younger editors being laid off or jumping
around to start new imprints, the job of nurturing an author has been left to
them. “You hear every day of an editor changing houses,” says longtime agent
Mort Janklow. “J. R. Moehringer [best-selling author of The Tender Bar], I
sold him to Hyperion.” Two of Moehringer’s editors left the house. “Then Bob
Miller decides to leave. This is a young man who writes a book about
abandonment! Who does he turn to? The departed publisher?! I take care of
him.”

Meanwhile, morale among many editorial staffers is dipping to all-time lows.
Forget literary taste; everything is cost-benefit analysis. “What I’ve 
says one powerful agent. Nobody knows where the readers are, or how to
connect with them. Fifteen years ago, Philip Roth guessed there were at most
120,000 serious American readers—those who read every night—and that the
number was dropping by half every decade. Others vehemently disagree. But who
really knows? Focused consumer research is almost nonexistent in publishing.
What readers want—and whether it’s better to cater to their desires or try
harder to shape them—remains a hotly contested issue. You don’t have to look
further than the pages of The New YorkTimesBook Review or the shelves of
Borders to see that the market for fiction is shrinking. Even formerly
reliable schlock like TV-celebrity memoirs doesn’t do so well anymore. And
“the next thing,” as Publishers Weekly editor Sara Nelson notes drily, “is
not bloggers writing books.”

Next: How sales people are dealing with Borders, Barnes & Noble, and Amazon.

Marketing a book these days is like playing a slot machine; hitting one 7
won’t get you a dime. “There has to be this constellation of events,” says
Daniel Menaker, whose departure was tied in the press to the low sales of
Benjamin Kunkel’s much-ballyhooed debut novel, Indecision. “Not only a Times
Book Review front cover but Don Imus talking about it and Ellen Pompeo
actually reading the book on-camera. And Barack Obama has just bought it.”

It’s plausible that publishing would already be in the red if it weren’t for
Oprah. And “she is reportedly going off the air in a few years,” says former
Simon & Schuster CEO Jack Romanos. “The most effective marketing tool they
have for a book isn’t going to be there. If I were still there, I would be
figuring out, now, different and better ways to market in anticipation of
that being taken away.”

This would mean far more than just the few book “trailers” you see online.
“They’re all the rage right now,” says Bloomsbury’s Peter Miller, “but I
would love to see an example of one video that really did generate a lot of
sales. There’s a se300 copies of, say, American Wife stacked precariously at
the entrance? Bought and paid for by the publisher. “You feel raped having to
pay for placement in a store you’re selling to,” says an agent.

But at least with two major chains, you can play one against the other. Even
in its weakened state, Borders can still boost a book into best-seller
contention. If something is selling well at Borders, a publisher can pressure
an increasingly stingy Barnes & Noble to reorder. If Barnes & Noble absorbed
Borders’ business, it would control 30 percent of the market—versus 10
percent for all the independents combined, with big-box retailers and Amazon
controlling most of the rest. (At its nineties peak, the indie-only American
Booksellers Association had 4,700 member stores; today it has 1,700.) This
matters because the following response from Barnes & Noble CEO Steve Riggio
is only technically true: “We buy every title published—our business is a
long-tail business—less than 5 percent is from bestsellers.”

Editors insist that plenty of books get skipped. Richard Nash, head of indie
publisher Soft Skull Press, estimates that one in twenty are passed over,
though ten to fifteen copies are shipped into their warehouses in case
there’s a special order. Many more are getting smaller initial orders than
ever. That’s a very long, very skinny tail.

Barnes & Noble, briefly interested in Borders, has since recanted. Recently
William Ackerman, a major Borders shareholder, suggested they should sell to
Amazon instead. That probably won’t happen, but his reasoning is clear.
Barnes & Noble is old news. Amazon is the future.

“The fear of Google [BookSearch] is ridiculous paranoia. The fear of Amazon
is enlightened self-interest.” —MIKE SHATZKIN, BOOK-INDUSTRY CONSULTANT

Attendance at this year’s BookExpo was way down, but you wouldn’t have known
it if you were among the 700-odd people at a presentation by Amazon CEO Jeff
Bezos. Lean, wiry, shaven-headed, and big-eared, Bezos talked up the Kindle,
the new e-reader that may or may not account for 1 percent of the book
market. No one knows. But while bookstore sales were to drop 7.1 percent that
month, Amazon was on its way to 31 percent sales growth (albeit for all media
products) for the second quarter. The audience greeted Bezos warily: His
sleek, West Coast style made Jane Friedman look like Vladimir Nabokov.

In a Q&A session billed as “Upfront and Unscripted,” none other than Chris
“Long Tail” Anderson quizzed Bezos on his plans. He couldn’t get many
straight answers (though Bezos was delighted to discuss the suborbital space
vehicle he’s working on). How many books would Bezos like to have available
on the Kindle? “Well, I probably won’t be happy unless we have 20 million,
but I’m hard to make happy,” he said, and then let loose a honking laugh.

Next: Will the Kindle be the iPod of books?

Publishers have been burned by e-book hype before. A few years back, analysts
were predicting we’d all be reading novels on our Palm Pilots. Barnes & Noble
even began selling e-books. Though it doesn’t quite look the part, Bezos’s
chunky retro Kindle is the closest so far to being the iPod of books. In
mid-August, a Citigroup analyst doubled his estimate for this year’s sales of
the readers—to almost 400,000.

Why weren’t publishers elated? What’s wrong with a company that returns only
10 percent of the books it buys and might eventually eliminate the cost of
print production? Well, it doesn’t help that Amazon, which has been on an
intense buying spree (print-on-demanders BookSurge; book networking site
Shelfari), lists publishers as its competitors in SEC filings. Editors and
retailers alike fear that it’s bent on building a vertical publishing
business—from acquisition to your doorstep—with not a single middleman in
sight. No HarperCollins, no Borders, no printing press. Amazon has begun to
do end runs around bookstores with small presses. Two new bios from Lyons
Press, about Michelle Obama and Cindy McCain, are going straight-to-Kindle
long before publication.

Amazon, in short, plays hardball. When Hachette Livre UK couldn’t come to
terms over Amazon’s U.K. payments, Amazon removed the BUY NEW button from its
listings for the company’s key books. Hachette’s CEO responded with an open
letter, saying, “Amazon seems each year to go from one publisher to another
making increasing demands in order to achieve richer terms at our expense and
sometimes at yours.”

The ultimate fear is that the Kindle could be a Trojan horse. Right now,
Amazon is making little or nothing on Kindle books. Lay down your $359 and
you can get most books for $9.99. Publishers list that same Kindle version
for about $17.99, though, and—as with all retailers—charge Amazon roughly
half that price for it. Which means that Amazon keeps only a dollar on each
book, while the publishers make $9.

But Amazon may be offering a sweet deal now in order to undercut publishers
later. If their low, low prices succeed in making e-books the dominant
medium, they can pay publishers whatever they want. “The concern is they want
to corner the market,” explains one books executive, and then force
publishers to accept a genuine 50 percent discount. “If they took over as
little as 10 to 20 percent of the market,” says an agent, “publishers simply
would not be able to exist.”

“We’re an industry more willing to watch the boat sink than rock it a wee
bit.” —ONE FRUSTRATED PUBLISHER

While many in publishing wait in their bunkers, HarperStudio and a few others
forge ahead. Back in February, Bob Miller and Jane Friedman met at the bar of
the Omni Berkshire hotel for one of their freewheeling chats. “How would you
do it differently if you could start all over again,” she asked him. He said
he’d try to reduce advances and returns, put out only a few books, and focus
on cheap Internet marketing. “Why don’t you do that?” she asked, and within a
week they had a deal.

Miller has worked out separate contracts, co-op and all, with booksellers and
authors—capping advances at $100,000 and reducing returns. Their list now
includes not just 50 Cent but Michael Eisner, his former boss at Hyperion;
John Lithgow (a memoir); and Isabella Rossellini adapting her short-film
series on bug sex. All these authors will contribute to their own
pre-publication marketing.

Miller doesn’t wait for agent submissions, instead accosting writers at
conferences, telling them how much more a writer can make under 50-50
profit-sharing. He’s even throwing in something literary, 22 previously
unpublished stories by Mark Twain, who, Miller points out, ran a
profit-sharing publisher that made a killing on Ulysses S. Grant’s memoirs.
“If he were alive, this is exactly the deal he’d want,” Miller says brightly.

Other industry folk, while supportive, note that precious few writers—except
those with trust funds—would forgo advances, and that it generally works best
for those who have a pre-existing fan base that will gobble up their books.
As for Miller’s other key ingredients, profit-sharing is not a new concept,
and online marketing is catching on everywhere. If there’s anything Miller
shares with the departed Friedman, it’s a knack for making restructuring look
like revolution. But in a business as illogical as publishing, maybe it is.

One indie publisher has been pitching an imprint around town that would go
beyond what Miller’s doing—expanding into print-on-demand, online
subscriptions, maybe even a “salon” for loyal readers. He envisions a
transitional period of print-on-demand, then an era in which most books will
be produced electronically for next to nothing, while high-priced, creatively
designed hardcovers become “the limited-edition vinyl of the future.” “I
think they know it’s right,” the publisher says of the executives he’s
wooing, “but they don’t want to disrupt the internal equilibrium. I’m like
the guy all the girls want to be friends with but won’t hop into bed with.”

Nearly all of these new ideas already exist in some form or another at
independents like Dave Eggers’s brainchild, McSweeney’s. But can they survive
inside a corporate, blockbuster-bound culture? “You can’t turn a camel into
an alligator,” says longtime agent and former Grove editor Ira Silverberg.
“I’d rather we have several soft years when investors get out and people who
care about the values in the business reinvest.”

But going back in time isn’t an option. A hundred Bennett Cerfs wouldn’t save
the current publishing model—not without a hundred Bob Millers puzzling out
the way forward, unhampered by fear or complacency. The kind of targeted,
curated lists editors would love to publish will work even better in an
electronic, niche-driven world, if only the innovators can get them there.
Those owners who are genuinely interested in the industry’s long-term
survival would do well to hire scrappy entrepreneurs at every level, people
who think like underdogs.

It’ll be rough going in the meantime; some publishers will transform, some
will muddle through, some will die. And there will, no doubt, be a lot of
editors for whom even this diminished era will look like the last great
golden age, when some writers were paid in the millions, some of their books
produced in the millions, and more than half of those books actually sold.
Book publishing is still a big-league business, and that’s a hard thing to
let go of. “There’s something terrible,” says an editor at a prestigious
imprint, “about admitting that you’re not a mass medium.”