The book publishing industry is in trouble. Book sales are declining, and the quality of books is in a precipitous freefall. The reason is that the industry is clinging to an obsolete business model. And the whole process of discovering new talent is broken beyond repair.
What the stale, gloomy New York book publishing industry really needs is a blast of California sunshine. Like the book publishing industry, Silicon Valley is in the business of cultivating, nurturing and funding intellectual property. The difference is that the Silicon Valley approach works, and the book publishing industry's doesn't -- at least not anymore.
Books are a unique business, but at its essence, a publisher is above all an investor. Much like a Sand Hill Road venture capital firm, a publishing company plays kingmaker by discovering, guiding and, above all, investing in the right talent.
Sure, publishing companies employ brilliant book designers, editors and others who collaborate to produce high-quality products. But they don't have a monopoly on those skills. Any author can hire great book designers, editors, printers, marketers and everyone else in the creative chain. What most authors can't do is invest $150,000 to produce and market an untested book. Ultimately, the ability to invest -- and the experience and wisdom to invest wisely -- is the only uniquely valuable thing about publishers.
The broken model
Here's how book publishing is supposed to work: Joe Author decides to write the Great American Novel. He bangs out a couple of chapters in his spare time, cobbles together a polished book proposal and goes hunting for a literary agent. Most real agents are maxed out with clients, but after six months of dedicated searching, he finds one, who then spends weeks or months shopping the proposal to major publishing houses.
The agent finds an editor at a major New York publishing company who believes in the writer, and so the agent negotiates with the company to decide all the details, including the fee structure. One of the most important elements of a writer's contract is the advance payment.
An advance is simply a loan to the writer from the publishing company that will be paid back from the writer's own royalties after the book goes on sale. Agents and authors want a big advance because the publishing company has to work hard to market the book in order to recoup its investment in the advance.
Joe Author, with a $40,000 advance check in hand, quits his job and starts working full-time to finish the book. Working with the agent, the author polishes the manuscript and submits it to the editor. The editor edits. The designers design. And eventually -- somewhere between one year and 18 months after the original submission -- the printers print, the distributors distribute and the marketers market.
That's how it's supposed to work. That's how it used to work. But nowadays, that's not how it works. The economics of publishing have evolved to the point where investing in a first-time author like Joe is way too risky. When you combine the advance and the editing, production, manufacturing and distribution costs, the publishing company is in for between, say, $50,000 and $200,000.
Publishers nowadays make their money by investing in a sure thing: Anti-aging books by Suzanne Somers; political propaganda by cable news blowhards; any book associated with TV, movies, blogs or Twitter feeds; and any book by an established author.
The result of this disconnect in the talent discovery system is that the quality of books is declining fast. Investment in authors requires a "platform," meaning some claim to existing fame. Oprah Winfrey has the ultimate platform, but so do TV and movie stars and even authors who have succeeded in the past.
Browsing a bookstore is like picking through trash in a garbage dump looking for something of value. Meanwhile, entire generations of brilliant authors never get the investment necessary to enter the system. Authors (like Joe) without an existing platform don't get book deals, with far too few exceptions.
And that's why the industry is dying. The content is skewing toward trash. The public is becoming less enthusiastic about books not because they have other diversions but because books are becoming less exciting.
How it should work
If the book publishing industry worked like Silicon Valley, here's how an author would get a book deal.
Every new author would forget about seeking an agent or an advance, and instead self-publish. This is what software and cloud-based start-ups do: They use their own money -- and the inexpensive tools available -- to build something on the cheap before they go asking for outside investment.
New services should emerge where authors could post links to their books, with samples, commentary and opportunities for reader reviews. A Digg-like voting system could surface the most popular titles.
Meanwhile, authors would try to get meetings to pitch to the publishing companies. Agents, rather than reacting to authors beating down their doors, could instead act more like sports agents and go out and hunt for new talent using Web 2.0 tools and the Internet in general to find brilliant authors.
If authors get their own deal, they could use that fact to attract the best agent, whom they would need as a guide and as a negotiator of the contract.
In either case, both agents and publishing companies would judge work not on a proposal, but on both the finished work and the public response to that work.
The publishing companies would design a new cover, re-edit the book as needed and re-release the title electronically and in print, but inexpensively as a trial. Only after this second round of open-beta testing would the publishing company decide whether larger investment is necessary. If so, there would be another edit, another design and another release, this time with the full package of marketing and promotion. Note that all of this could easily take place within the one year to 18 months that it already takes between manuscript and publishing.
Four steps to success
Here's my advice to the publishing industry:
1. Stop belittling or dismissing self-publishing. By thinking of self-published books in the same way you think of proposals, you can learn to view the self-publishing market for what it is: a farm program that is the key to your salvation.
2. Think about a book in the same way that a cloud-based service thinks about its product -- always a work in progress and never finished. Most nonfiction and even some fiction should be rereleased frequently with improvements, corrections and updates.
3. Stop thinking that a book is a bound stack of paper. A book has no physical form. It's a collection of ideas. It's intellectual property. You don't sell tree pulp. You sell stories and information, and you should sell it in any form and in any medium that the customer desires, without fear or favor and without trying to manipulate readers with release dates on different platforms. Just release every form as soon as you can and let readers pick.
4. Kill the advance. There's absolutely no reason to shackle yourselves with this investment. Change the model so that you invest only in proven winners. Force austerity on writers and on your own operations. By reducing the cost per author, the same money can support more authors and thereby increase chances for mega-hits.
There's no question that the old book publishing model is broken beyond repair. It's time to replace it.
We live in the age of the Internet, but that doesn't mean books are obsolete. It means only that inefficiency will be punished and flexibility will be rewarded. At least that's how it looks from Silicon Valley.