The Big 6 Become the Big 5: Is Traditional Publishing Dying?

The “Big 6” used to control most of the book publishing industry:

Hachette
Macmillan
Penguin Group
HarperCollins
Random House
Simon & Schuster

Slowly over the past few years, these “Big 6” have been buying up major publishing real estate with slightly smaller, specialty traditional publishers like Thomas Nelson and Zondervan. This gave them a larger platform of already successful books to sell.

 

Then these companies began making deals with not-so-reputable “self”-publishing companies like Author Solutions (AuthorHouse) to try and nab their piece of the multi-million-dollar self-publishing author pie… and offer a “hybrid” self-publishing option to aspiring authors. This suckered authors into paying to be published by a big publisher, have their self-pub imprint on their book, and if the book were “successful,” it “might” be picked up by the bigger parent publisher. The fact is the average self-published book sells a whopping 75 copies. And most books through these hybrid models cost anywhere from $5,000-40,000 to produce… 100% from the author’s pocket.

Recently Penguin got the “great” idea to just buy out Author Solutions, and then proceeded to get sued by angry authors who claimed AS ripped them off (and had hard evidence to prove it).

And now we’re hearing of Random House merging with Penguin, perhaps to save them yet again?

If you’ve been following these big traditional publishers, It’s the “get rich quick” mentality on a multi-million-dollar level.

So what’s the big deal? Why does this trend continue? And will we eventually see only one of the “Big 6” in a few short years as they slowly merge themselves out of existence in the name of “survival?” What does this mean for authors?

Here are my own opinions on why traditional publishing is slowly dying and what authors need to be aware of:

Advance Investment

Back in the “good old days” of reputable traditional publishing, publishers paid a “reasonable advance” of $10,000-12,000 to newly contracted non-fiction authors and expected to earn that advance back in book sales. Then they would work hard to market the book and position the author as an expert. After all, why would a publisher give an advance to an author if they weren’t expecting a return on their investment?

Nowadays the average advance for a new non-fiction author is $1,000. That number is not missing a zero. It’s not that they feel new authors won’t earn back an investment. In fact, many new authors do earn at least their advance back in book sales. To the contrary, that number is barely what’s left in the publisher’s budgets.

Why? Look at your bookstore shelves. Most non-fiction being published by the “Big 6” nowadays are political and celebrity books. In fact, in April of 2013 Simon & Schuster announced an advance of $14 million to Hillary Clinton for her newest book, to be released shortly before the 2016 presidential race begins.

In my own opinion, we see these trends because big names at the “Big 6” want to “legally” support specific celebrities and political candidates. One of the ways they can fund campaigns is to sign that person on as an official author and pay them an advance. And with a history of paying other celebrity political authors $8 million or even $15 million in an advance (which, by the way, was much higher than “typical” at the time it was given), legal authorities can’t question motives. After all, according to the Senate ethics rules, income from book contracts is permitted, as long as the deals are within “usual and customary” industry patterns.

This huge advance may further the career of someone a major corporation wants to loophole into the Senate or White House, and the history of these publishers taking this same action year after year, combined with continuing overall drops in book sales, are feeding a disease that will eventually kill these publishing companies.

Maybe they feel the government will “bail” them out… especially if they funded a president into office. All I can say is if you continuously spend more money than you make, you’re going to eventually run into a place where there’s no more money—from anywhere.

Lack of Quality

The next logical step a company that invests major money on these types of book deals takes is to lay off some of their staff. After all, if they can’t afford to pay their editors, they can always outsource, right? The problem here is a good editor is worth their weight in gold. And publishers are getting cheap, so they’re going after cheap help. Remember the stigma self-published books used to have because none of them were properly edited? Pick up a few traditionally published books and see how many typos and grammatical errors you can spot.

Now I’ll be the first to tell you every book has a typo. In fact, most published books have one typo per every four pages. However, I’ve recently read some so-called “best-selling” books that were laden with typos. This combined with poor cover design and poorer print quality as publishers print cheaper products in China with a huge markup to get more money from each book is killing book quality overall. And it’s been proven time and again customers will pay more for higher quality, so as more authors wizen up and invest in high quality editors, the more they’ll be able to compete with poorer quality “Big 6” books.

Technology Changes

When JK Rowling negotiated the eBook publishing rights to her contract, then proceeded to publish the Harry Potter series in eBook format under her own publishing label, she was scoffed at by people who claimed she was simply money hungry. Personally, I think she was smart! She knew if she became a success, she could sell millions in the eBook format. Her publisher didn’t understand this new technology, and like many traditional publishers took a long time to embrace it.

Forward-thinking authors who kept these rights are now multi-million-dollar success stories. And publishers are finally starting to catch up to the trend, albeit a little late.

I sat next to a Regional Director for Macmillan (one of the “Big 6”) on one of my recent plane trips. She told me within the next four years Macmillan would be publishing 100% of its textbooks exclusively in eBook format. She said it’s been a many-year uphill battle and the powers that be have fought about embracing this format so long they almost got left behind. It became a financial necessity to either embrace it or have to downsize the company.

Traditional publishers are old-school thinkers. They work within an old-school book buying system regulated by old-school bookstores’ buying policies, and will eventually need to embrace new technologies such as print-on-demand (POD) printing and eBooks if they’re going to survive.

Self-Publishing Success

As traditional publishers struggle in their downward spiral of losing money on advances and producing poor quality books that sell less copies, they get more rigid with their contracts. Now it’s quite common for a traditionally published author to literally sign her life away when she signs that contract. There’s actually a clause in most contracts stating the author must ask her editor for permission before writing or publishing anything for anyone else, including herself.

Add to that the fact that most traditional publishers require the author to front 100% of their own marketing plan and budget, yet take almost 100% of the profits for themselves, it’s no wonder more authors are turning to self-publishing. Self-publishing is the Freedom Fighter of the publishing industry. It’s the method for authors to stand up for themselves, show they don’t need “the man” anymore and thumb their noses at the “Big 6” when they become successful.

And self-publishing is where many successful traditionally published authors like Guy Kawasaki, David Mamet, Seth Godin and even Stephen King are headed. In many cases these previously contracted authors are starting their own publishing companies, and some are even selling “self”-publishing services (ie: vanity) to newbie authors with promises of fame and fortune.

While self-publishing may definitely seem the way to go, especially as more mergers mean less traditionally published books, smaller marketing budgets, and tighter contractual obligations for authors, aspiring authors need to beware. Now more than ever authors need to thoroughly research their options. A new publishing “expert” rises every day and new publishing companies selling shiny services pop up just to disappear again a few months later.

The bottom line is, if your book is with any other company and not you directly, you’re still signing away your rights. You may even be signing away your book files should that publishing company go under (as many of them quickly do). Do your research, and consider starting your own publishing company to retain 100% control over your own books, rights and profits.

In other words, model what those successful previously traditionally published authors are doing. Don’t fall for a shiny deal from a self-publishing company unless that deal includes setting up yourself as the company.

The Future

No one can predict the future of publishing, despite what gurus may want you to think. My personal opinion is that while the “Big 6” traditional publishers may shrink, merge, and even disappear, traditional publishing will never go away. There are hundreds of small, independent traditional publishing houses that operate with smart budgets, no alternate political agendas, and sign savvy authors.

The future of publishing will likely see more authors self-publishing, more authors starting their own publishing companies (and even publishing other authors), and smaller indie houses springing up. It will be reminiscent of how all the “Big 6” companies were initially born, and it’s going to be an exciting ride!