The judge ultimately ruled that the merger would create a monopoly and blocked the $2.2 billion purchase. But during the trial, the head of every major publishing house and literary agency got up on the stand to speak about the publishing industry and give numbers, giving us an eye-opening account of the industry from the inside. All of the transcripts from the trial were compiled into a book called The Trial. It took me a year to read, but I’ve finally summarized my findings and pulled out all the compelling highlights.
But let’s dig into everything they said in detail.
Bestsellers are rare
In my essay “Writing books isn’t a good idea” I wrote that, in 2020, only 268 titles sold more than 100,000 copies, and 96 percent of books sold less than 1,000 copies. That’s still the vibe.
Q. Do you know approximately how many authors there are across the industry with 500,000 units or more during this four-year period?
A. My understanding is that it was about 50.
Q. 50 authors across the publishing industry who during this four-year period sold more than 500,000 units in a single year?
A. Yes.
-- Madeline Mcintosh, CEO, Penguin Random House USThe DOJ’s lawyer collected data on 58,000 titles published in a year and discovered that 90 percent of them sold fewer than 2,000 copies and 50 percent sold less than a dozen copies.
In my essay “No one will read your book,” I said that publishing houses work more like venture capitalists. They invest small sums in lots of books in hopes that one of them breaks out and becomes a unicorn, making enough money to fund all the rest.
Turns out, they agree!
Every year, in thousands of ideas and dreams, only a few make it to the top. So I call it the Silicon Valley of media. We are angel investors of our authors and their dreams, their stories. That’s how I call my editors and publishers: angels… It’s rather this idea of Silicon Valley, you see 35 percent are profitable; 50 on a contribution basis. So every book has that same likelihood of succeeding.Those unicorns happen every five to 10 years or so.
— Markus Dohle, CEO, Penguin Random House
We’re very hit driven. When a book is successful, it can be wildly successful. There are books that sell millions and millions of copies, and those are financial gushes for the publishers of that book, sometimes for years to come… A gusher is once in a decade or something. For instance, I don’t know if you know the Twilight series of books? Hachette published the Twilight series of books, and those made hundreds of millions of dollars over the course of time.Big advances go to celebrities
Right now the novels of Colleen Hoover are topping the bestseller lists in really, really huge numbers and the publishers of those books are making a lot of money. You probably remember The Girl With the Dragon Tattoo… Or the Fifty Shades of Grey series. So once every five years, ten years, those come along for the whole industry and become the industry driver that’s drawing people into bookstores because there is such a commotion about them.
— Michael Pietsch, CEO, Hachette
They spent a lot of the trial talking about books that made an advance of more than $250,000—they called these “anticipated top-sellers.” According to Nicholas Hill, a partner at Bates White Economic Consulting, 2 percent of all titles earn an advance over $250,000. (...)
Because they are so lucrative, Gallery Books Group focuses its efforts on trying to get celebrities to write books.
75 percent [of our] acquisitions come from approaching celebrities, politicians, athletes, the “celebrity adjacent,” etc. That way, we can control the content…. We are approaching authors and celebrities and politicians and athletes for ideas. So it’s really we are on the look out. We are scouts in a lot of ways…It’s all about the backlist
— Jennifer Bergstrom, SVP, Gallery Books Group (...)
If new books typically don’t sell well, well that’s why publishing houses make their revenue from their backlist.
I would actually expect a book that is selling 300,000 units in a year is probably going to sell at least 400,000 or 500,000 over its life once you get backlist in there too.The backlist includes all of the books that have ever come out. Brian Murray, CEO of HarperCollins, points out that their backlist includes bibles (an $80 million business), coloring books, dictionaries, encyclopedias, magic trick books, calendars, puzzles, and SAT study guides. It also includes perennial bestsellers like Don Quijote, Steven King’s Carrie, and Tolkien’s Lord of the Rings—these books continue to sell year after year.
Our backlist brings in about a third of our annual revenues, so $300 million a year roughly, a little less.
— Michael Pietsch, CEO, Hachette
Popular children’s books are cash cows selling huge amounts of copies year after year and generation after generation.
Sometimes children’s books will be three generations, people have been buying them over and over again, and so that backlist catalog is really, really important to pay for the overhead of your publishing teams and then also to take the risks on the new books. So without a backlist I think it’s very hard to compete with these big books.A “Netflix of Books” would put publishing houses out of business
— Brian Murray, CEO, HarperCollins (...)
Wouldn’t it be great if you could pay $9.99 a month and read all of the books you want? Just like you get all the movies you want from Netflix? Or all the music you want from Spotify?
Technically, it does exist. Kindle Unlimited is the largest, followed by Scribd. Audible isn’t quite all-access, but then Spotify got into audiobooks and made them so. But none of these players have quite taken off the way Netflix or Spotify has. That’s for one reason: The Big Five publishing houses refuse to let their authors participate.
Q. No books are found on Kindle Unlimited? Because you think that’ll be had for the industry?”He’s right. No one would purchase a book again.
A. We think it’s going to destroy the publishing industry.
— Markus Dohle, CEO, Penguin Publishing House
We all know about Netflix, we all know about Spotify and other media categories, and we also know what it has done to some industries… The music industry has lost, in the digital transformation, approximately 50 percent of its overall revenue pool.There’s one reason.
— Markus Dohle, CEO, Penguin Publishing House
Around 20 to 25 percent of the readers, the heavy readers, account for 80 percent of the revenue pool of the industry of what consumers spend on books. It’s the really dedicated readers. If they got all-access, the revenue pool of the industry is going to be very small. Physical retail will be gone—see music—within two to three years. And we will be dependent on a few Silicon Valley or Swedish internet companies that will actually provide all-access.The publishing industry would die, that’s for sure. But I’d be willing to bet writers would get their books read way more.
— Markus Dohle, CEO, Penguin Publishing House
And I think it’s on its way. Spotify has already started publishing audiobooks, and my money is on Substack for eventually publishing written books!
by Elle Griffin, The Elysian | Read more:
Image: uncredited
[ed. Floored by these numbers (and process in general). More at the link.]
