Are Publishers Relevant? S&S CEO Carolyn Reidy Answers the Question
Over the past year or so, I have been attending timely and informative book publishing lunch hour Meetup meetings—first come, first serve by advance sign-up —sponsored by Susan Danziger's Publishing Point. They are held in donated upper- floor meeting rooms in the high-rise midtown Manhattan headquarters of major houses such as Random House, Hachette, News Corporation, McGraw Hill—and this past March 23, by CBS, parent of Simon & Schuster (S&S), in Studio 19.
The featured guest was Carolyn Reidy, CEO of S&S. A straightforward and perceptive publisher who rose through the ranks, she started out in subsidiary rights with Random House, then William Morrow and Vintage Books before joining S&S. She is an M.A. and Ph.D. in English who presides over a $900 million publishing house that was started in 1924 to publish crossword puzzle books. Richard Simon and Max Schuster built a business driven by the most fundamental entrepreneurial instinct —find a need and fill it. That precept still works.
Among the big four trade houses, S&S imprints include Atria, Atheneum, Free Press, Gallery, Pocket Books and Scribner, among others, and it is home to authors including Mary Higgins Clark, Stephen King, David McCullough, Doris Kearns Goodwin, Janet Evanovich and Bob Woodward, not to mention Hillary Clinton, Laura Bush and Glenn Beck.
Reidy was interviewed in a conversational setting by Michael Healy, director of the Book Rights Registry-in-waiting—whose future was placed in doubt by Federal Judge Denny Chin's denial the day before, without prejudice for reconsideration, of the Google Book Settlement under which the registry would function.
With S&S being one of the parties to the original settlement, Reidy expressed the view stated earlier by the AAP, that going back to the boards and coming up with a plan acceptable to the court still remains preferable to its abandonment. As Healy noted, while an "opt-out" vs. "opt-in" framework would be more desirable, the Registry already had around 1.5 million opt-ins in its archives.
Putting this immediate subject out of the way at the start, Healy opened the conversation quoting Len Riggio, CEO of Barnes & Noble, when he said that the industry is on the cusp of a transformation and that he was optimistic about its future.
Reidy said she shared his optimism, but demurred otherwise in that we are beyond the cusp and deep inside of the revolution. Looking to the future, the industry needs to unstick itself from the legacy of systems that were designed for work flow and distribution needs of an inventoried book and retail distribution channel—systems that are now being de-coupled and deconstructed to accommodate the new technologies, and new reading and buying habits of consumers. These legacy systems are among the major roadblocks to moving nimbly in the current marketplace. Were she to start a new company from scratch, these would be the first to go.
The heart of the matter, however, is that the biggest challenge she and the publishing industry face is remaining relevant to authors. What has happened to call this relationship into question?
Back to the founding of S&S and fast-forward to the dot-com revolution and the Internet, and [Amazon CEO] Jeff Bezos. As I see it, Bezos also saw a need and filled it: an opportunity to streamline the whole process of book discovery and bookselling (with a little help from Google), and traveled West from Wall Street to Seattle where he launched an enterprise that would revolutionize the book business. In the process, he contributed mightily to the deconstruction and re-focusing of the legacy book publishing business model and supply chain.
He started this enterprise as far from the center of book publishing as he could get, demonstrating in the process that location was no longer the key to successful enterprise. He gradually brought the book-buying marketplace with him into the net and now into the cloud and off the ground. This hastened what looked like the inevitable extinction of the bookstore, and weakened the hold of major publishing houses as necessary to finance and mount general or targeted sales strategies.
Slow to get off the ground—but not too slow—book publishers like Carolyn Reidy are saying, "Not so fast!" For one thing, unlike the music publishers, book publishers are listening more carefully to their customers and authors.
Of course, the growth of the independent publishing movement was largely due to the fact that 30 years ago, with new tools at hand, they built their businesses on just that premise—listening to authors and readers.
Reidy noted that self-publishing and digital editions—the mushrooming of e-book sales, now passing 15 percent, soon to be 25 percent and not too far along, 50 percent of sales—have empowered authors to take matters into their own hands and question the publisher's added value.
Publishers provide four major benefits, she said: editing support to polish the author's message, positioning the book to reach the largest possible audience, providing advances that will support the author while the book is being written, and doing all the "stuff" needed to manage the development, production, sales support, cash flow and distribution of the work. Doing all the "stuff," not to mention positioning the book effectively, doesn't come easily. Pointing to the self-publishing stories of popular authors (e.g., Stephen King, Seth Godin, Amanda Hocking, Barry Eisler) as well as other mid-range authors, she noted that they discover they also need to operate as mini-publishing companies, which detracts from their time writing.
When an author finds these self-publishing options attractive nonetheless, the challenge to legacy publishers is to look at their business models and how they can be balanced to be in line with the new publishing economy.
Some other interesting insights Reidy offered included emphasis on the importance of physical bookstores as a social experience and places of discovery even if the sale isn't made there. Publishers need to support the transformation of the bookstore in the development of retail business models that will be attractive to their community and profitable to themselves.
She noted that e-books offer a special challenge to the economics of the industry. In principle, the publication of one copy of an unprotected e-book is enough to enable distribution of free copies throughout the world. She suggested that debating the issue of low-priced e-books devaluing the price of printed books misses the point. The pricing of books by publishers always had as much to do with valuing the intellectual property as it did recovering a margin on costs.
Reidy revealed that S&S still does not sell e-books to libraries for the very reason that they haven't yet developed a business model for library sales that she feels would provide a fair return as compared to print sales.
Given the turbulence in the industry, would she encourage anyone interested in a career in publishing to pursue it? Absolutely! New forms of the book will emerge as well as new ways of creation and delivery. Authors and readers will always be seeking each other. A whole new industry is being created, and someone starting out now will be part of that process.
As a sidebar to her outlook that the best is yet to come, she warmed the cockles of an old production manager's heart when she pointed out that at some point we need to start paying attention to the graphic design elements of the e-book reading experience—an art which, when you get past the cover, at the moment seems to have been abandoned in the fast-moving reflowable universe.
As an executive in a major legacy house, the biggest change she has had to deal with is that the e-book world has grown faster than she expected. The challenge is what balance to strike between the print and digital sales and distribution mix going forward.
The significant takeaway for me was that Reidy has no doubt that authors and their reading public will continue to seek each other, and that there will still be units of books to be created and sold. The uncertainty today lies in which formats and delivery systems to bet on.
It is hard not to see an irony in the contrast between the steel and granite towers in which these issues are discussed at Publishing Point events, and the ephemeral media on which their future will be based.
I think I need to get into the city when spring is in full flower in a few weeks to shake off the sense that these monumental publishing towers are ghosts of a time now vanishing into the past. Rather, they need to be seen as tributes to the moments seized and to the imagination and aspiration that brought us here and that will be sure to carry us forward.
Some bright blue sky and sunlight, the exuberant and purposeful energy of New York street life, and the relaxing vitality of its major and minor parks will bring out that energy. If you look closely, people are not only reading as they relax in the sun for lunch or sit at their desks—but as they work, walk, wait and ride—using their portable devices that connect us in real time to content everywhere.
Carolyn Reidy strikes me as a woman as very much relevant, and at the ready to get ahead of the moment.
Eugene G. Schwartz is editor at large for ForeWord Reviews, an industry observer and an occasional columnist for Book Business magazine. In an earlier career, he was in the printing business and held production management positions at Random House, Prentice-Hall/Goodyear and CRM Books/Psychology Today. A former PMA (IBPA) board member, he has headed his own publishing consultancy, Consortium House. He is also Co-Founder of Worthy Shorts Inc., a development stage online private press and publication service for professionals as well as an online back office publication service for publishers and associations. He is on the Publishing Business Conference and Expo Advisory Board.