The Business of Drivel: Nash Equilibrium in Publishing
People just aren’t reading anymore, or so publishers tell us. Sales are dwindling; bookstores and publishers alike are closing their doors. On the surface it seems fair to assert that there might not be much of a market for books right now. Publishers insist on this as the explanation for the dire state of their industry.
Under scrutiny, however, these statements start to sound absurd. Literacy rates have climbed prodigiously over the last few decades, with world population growing steadily all the while. There are more readers than ever before. On average they have more disposable income than any previous generation.
In the meantime, nerd culture has become main-stream and intellectualism has become socially acceptable. ‘The book was better’ is a rallying cry for a generation desperate to appear smart and discerning.
I find myself unable to accept the assertion that there is no market for books.
There must be a more compelling explanation. One possibility stands out in particular. People aren’t buying books because bookstores simply don’t have anything good.
If that notion is difficult to believe, just take a walk through a bookstore. Don’t head for the sections you normally frequent; just grab books at random. Now, and this is important, be careful not to accidentally buy them. Rather, just take a look at what you’re holding. Odds are that there is nothing in your hands that you would ever want to read.
That’s certainly my reaction, and the reaction of most readers that I know. I’m no book hater; I’m a fairly prolific reader; three to five books in a typical week. I love books in a way that the average person would find off-putting. And yet even I find a bookstore’s typical contents to be distasteful at best.
If that’s the reaction of a devoted reader, try to imagine how someone would feel browsing a bookstore’s shelves for the first time. With no idea what they might like or where to find it, they’re adrift in a sea of drivel. It’s little wonder that people aren’t buying books; they can’t find any worth reading.
For those of you who are sceptical I point out that everyone reading this has an unusual level of interest in books. Not only do you like books more than most people, you’re also willing to put more effort into finding what you like. Your experience of reading is downright rosy by comparison to what the average person can expect. If you ever find yourself rolling your eyes at some of the tripe that makes it onto bookstore shelves, just put yourself in the shoes of someone who tried to read that tripe without knowing better.
Every time that happens, there’s a good chance that the publishing industry loses a customer for good. That’s a pretty compelling narrative for how the book market continues to shrink in such favourable conditions. We have arrived at a state of affairs where people want to read and want to be seen to read, but won’t step into a bookstore.
When books are bad, people stop buying books.
There is one key component missing from our narrative. How did books become so bad, and why? Surely the publishing industry has a vested interest in producing books that people enjoy reading, how could they possibly have made a business of poisoning their own market by churning out drivel?
The answer, or at least part of it, lies in basic game theory. Printing one title and selling three thousand copies brings in less money than printing two titles that each sell two thousand copies. Twenty titles selling a thousand copies apiece is an even better bet. In the past, the high capital costs involved in getting a book to press made this a losing strategy. The advent of digital printing slashed those capital costs and removed the need for publishers to be selective, a phenomenon reinforced by the growing popularity of e-books.
The results have been staggering. As an example, the 2013 Bowker report indicates that the total number of ISBNs registered annually in the US increased tenfold between 2002 and 2012. With ten times as many books on the market, plummeting quality is no surprise.
The publishing industry as a whole is best served by being selective and ensuring a good consumer experience. Individual publishing houses, however, are best served by flooding bookshelves to drive revenue. It’s a classic example of a non-optimal Nash Equilibrium.
This simple phenomenon would stand on its own as an explanation for dwindling quality in the book market, but that’s not the only thing wrong with this picture.
A tenfold increase in the number of titles also represents a catastrophic drop in revenue per title, which means less money for writers per book. Low pay for writers has been a running joke for as long as I can remember; it’s disturbing to think that they are earning a fraction of what they did a decade ago. The vast majority of books are effectively written by underpaid amateurs in their free time, with predictable effects on quality.
Publishers are entirely dependent on writers as the sole producers of the industry’s stock in trade. The health of the publishing industry depends on quality writing which in turn depends on putting more money into the hands of writers. Instead, the industry trend is toward extracting more money out of writers instead. Writing classes and editorial services are the tip of the iceberg; writers are increasingly pressured into the so-called literary community.
You want to talk to an agent? Pay a small fee to attend a pitch party. You want to network with established writers? Buy a ticket to a book launch. Your agent told you to build your own writing platform, but you aren’t sure how? Try a seminar. Or maybe buy an e-book.
The trouble with all this is that it’s hopelessly insular. No amount of networking in the literary community is going to get the general public back in bookstores. All it’s really good for is persuading writers to sell their books to each other. If I buy your book and you buy mine, we’ve both lost money. But our publishers haven’t.
Also problematic are the archaic royalty rates that stopped making sense decades ago. 15% was fair back when a printing press cost a fortune and type-setting a manuscript required weeks of specialist labour. In the modern era, however, publishers are required to front up less and less capital to get a book to press. They’re spending less and less on marketing per title while expecting writers to assume more of the marketing load themselves. By all rights, their revenue share should drop in proportion to their diminishing contribution.
Instead of nurturing writers, publishers are exploiting them. Instead of actively re-engaging a wider audience, publishers have turned inward to cannibalise their own industry. Writers are earning less and spending more than ever before. As the industry grows ever more insular, its particular taste in books is able to drift further and further away from what the general public would enjoy reading.
This is a generation that wants to love books. It has the disposable income to buy them in unprecedented numbers. Books themselves cost less to produce than ever before. And yet, somehow, the prospects for writers seem unutterably bleak.
Like every crisis, however, this one carries opportunities.
No-one is selling books that people enjoy and that creates a gap in the market for anyone who is. The general public has no faith in big publishing houses and that leaves a space for strong new brands to make their presence felt. The publishing industry might be a little bit broken right now but that just raises the stakes for everyone who steps in to fix it.