Technology, Retail Economics Are Changing Publishing

Experts weigh in at Ethics and Publishing Conference.

Marvin Kalb
"I have to trust my publisher to do the right thing through our common interest to make the book a success,” said longtime journalist and Kalb Report host Marvin Kalb.
June 06, 2014

By James Irwin

Not so long ago, a book publisher had a simple set of ethical requirements: edit the manuscript, make it available to the public, market the work effectively and pay royalties.

That’s no longer the case, a group of industry experts said last week at the George Washington University Ethics and Publishing Conference. Technology advances have not only enabled digital and interactive media to become more popular and accessible, they have provided content producers the ability to reach their audience without the backing of traditional gatekeepers. All the while, publishers still face the same challenge: providing relevant information to the public.

Practices are emerging out of a new reality, speakers said last week at the day-long conference, hosted by the College of Professional Studies and the M.P.S. Program in Publishing. Independent, on-demand publishing options have given rise to authors like Hugh Howey, whose self-published, science-fiction series “Wool” has emerged as a powerful example of what a little creative muscle can do in the era of the e-book.

“An author could never reach an audience without a publisher, and so business practices for publishing grew up around that reality,” said Mike Shatzkin, founder of the Idea Logical Company. “That’s changed. Hugh Howey was making $50,000 a month on Amazon, and the U.S. publishers were offering him $300,000, and it didn’t seem to him like a deal worth taking.”

Barriers to entry have further been broken because competition is no longer defined by industry and medium, said Peter Kaufman, founder and president of Intelligent Television and the new Google-funded Intelligent Channel.

“We are all—publishers, producers, journalists, academics, activists—in the attention business,” he said. “In the United States, each of us spends almost half the day on a screen. Next year, according to Cisco, video will exceed 91 percent of all global consumer traffic on the Internet, and we’ll have 11 billion square feet of screens in operation worldwide.”

People spend nearly half the day on screens, said Peter Kaufman, founder and president of Intelligent Television. "Video has emerged as the preeminent medium," he said, "and that's pretty impressive considering it's only been around for about a century."

One screen in particular, Amazon’s Kindle, represents a hurdle in its own right when it comes to the economics behind one of publishing’s most important markets: the e-book. Amazon, which lowered e-book prices for consumers to increase market share when it introduced the Kindle in 2007, has emerged as the big winner of a 2013 federal court ruling that found Apple and five of the largest publishers in the world colluded to fix the prices of e-books across retailers.

This method of agency pricing had gone into effect as Apple prepared to unveil the iPad in 2010 and meant books would cost the same amount at every e-book retailer. When it was struck down, it allowed Amazon to lower prices again, giving it a competitive advantage and allowing the Kindle to reclaim the market share it had lost to the iPad and Barnes & Noble’s Nook. Since then, Amazon and trade book publisher Hachette have dug in for what could be a long fight over the renegotiation of their retailer contract. The core issue: Hachette’s desire to appropriately value the publisher’s role in editing, marketing and distributing books versus Amazon’s mission to lower costs on a product—the e-book—that it believes is overpriced. The result of this fight, Mr. Shatzkin said, has far-reaching implications, given Amazon’s large market share.

“Amazon changed the economics of the book business,” he said. “The book business, for Amazon, is a customer-acquisition tool that brings in millions of people to buy things online. As soon as Amazon got into e-books the first thing they did was cut the price because they don’t need as large a profit on book sales. So you have a competitor who doesn’t need to make money on books versus all the other companies who do need to make money on books. That’s not good for the people trying to make money on books. This does not strike me as an ethical situation. Books aren’t widgets. Books represent ideas.”

The sharing of ideas remains an ethical imperative of the publishing industry. "If you know something it is your responsibility to talk about it," said Michael Jensen, former director of strategic web communications for the National Academies and National Academies Press. "It is our responsibility, as publishers, to make public the concerns of our culture and what’s truly important."

The sharing of those ideas, particularly those of public interest, remains an ethical imperative of the publishing industry despite the economic upheaval, said Marvin Kalb, Edward R. Murrow Professor Emeritus at Harvard’s Kennedy School of Government and host of the Kalb Report. Mr. Kalb, a longtime journalist and former Moscow bureau chief for NBC, is the author of 14 books, including “Kissinger,” “Eastern Exposure” and “The Nixon Memo.” He’s currently working on a nonfiction project on the Russia-Ukraine conflict, drawing on his knowledge of historical ties between the two countries. Like many topics he’s covered, success for this project involves trust between author and publisher, he said.

“I had a colleague at CBS who once said to me, ‘If you write something down, and do it in an interesting way, that’s how people will follow what’s running through your head.’ So I made it my business at all times to write books,” Mr. Kalb said. “I am, as a writer, totally in the publisher’s hands, and I have to trust my publisher to do the right thing through our common interest to make the book a success.”

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