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The End
The book business as we know it will not be living happily ever after. With sales stagnating, CEO heads rolling, big-name authors playing musical chairs, and Amazon looming as the new boogeyman, publishing might have to look for its future outside the corporate world.
By Boris Kachka Published Sep 14, 2008

HarperCollins occupies oors 1 through 22 of a giant steel-and-glass box on 53rd Street. But up on 26, the receptionist for a tiny offshoot of the company sits alone, gatekeeper to a few drab rows of empty cubicles. A glass container on a table holds a mysterious pile of bright-yellow lightbulbs. Welcome to our temporary home, says 51-year-old publisher Bob Miller, ushering me into a colleagues more inviting ofce. Inside, he and his staffers prepare to impart a cheery message: Theyre going to x publishing!

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But rst, a horror story. Debbie Stier, Millers No. 2 at HarperStudio (as this little imprint is called), has been collecting videos for their blog. You want to see what happens to books after they go to book heaven? she asks. On the screen of her MacBook, a giant steel shredder disgorges a ragged mess of paper and cardboard onto a conveyor belt. This is the fate of up to 25 percent of the product churned out by New Yorks publishing machine. Everyones eyes widen, as though watching some viral YouTube gross-out. Its like Wall-E, says marketing director Sarah Burningham. Its depressing, Miller adds. They had sent in a Flip camera with a warehouse worker. You can see our books go through there, says Stier. The Crichton, the Ann Patchett. Miller recently left Hyperion, which he founded seventeen years ago, to start his own imprint at the urging of HarperCollinss then-CEO, Jane Friedman. She was replaced in June, but HarperStudio lives on. For all its ambitions, its a modest outt: Miller and three women, two of them in their twenties, hope to publish two books a month starting next May, having convinced 25 authors to forgo big advances in return for half of their books eventual prot. The books theyll be doing arent particularly outrEmeril Lagasse on grilling, 50 Cent is collaborating with The 48 Laws of Power author Robert Greenebut theyre hoping that their process will be revolutionary. Over the past few weeks, Stier has turned her own Flip camera on friends and colleagues, asking them to hold up those yellow lightbulbs and share their bright ideas on publishing. She plays us a few of the clips, including one of a publicist who delivers Stiers intended punch line, tentatively: Have fewer authors and sell more books? But the suggestion that gets the biggest laugh in the ofce is from Stiers 12-year-old son, who says, So maybe you have to turn all the books into movies so nobody has to waste their time. It is a very trying time. Im kind of down about it myself. JONATHAN GALASSI, PRESIDENT OF FARRAR, STRAUS AND GIROUX The demise of publishing has been predicted since the days of Gutenberg. But for most of the past centurythrough wars and depressionsthe business of books has jogged along at a steady pace. Its one of the main (some would say only) advantages of working in a mature industry: no unsustainable highs, no devastating lows. A stoic calm, peppered with a bit of gallows humor, prevailed in the industry. Survey New Yorks oldest culture industry this season, however, and you wont nd many stoics. What you will nd are prophets of doom, Cassandras in blazers and black dresses arguing at elegant lunches over What Is to Be Done. Even best-selling publishers and agents fresh from seven-gure deals worry about whats coming next. Two, ve years from nowwho knows? Life moves fast in the waning era of print; publishing doesnt. So whats causing this, exactlythis inchoate dread thats suddenly turned choate, as one insider puts it? The anxiety would be endurable if it was just a function of the late-Bush economy: Sales at the ve big publishers were up 0.5 percent in the rst half of this year, bookstore sales tanked in June, and a full-year decline is expected. But pretty much every aspect of the business seems to be in turmoil. Theres the oundering of the few remaining semi-independent midsize publishers; the ouster of two powerful CEOsone who inspired editors and one who at least let them be; the desperate race to evolve into e-book producers; the dire state of Borders, the only real competitor to Barnes & Noble; the feeling that outrageous money is being wasted on mediocre books; and Amazon .com, which many publishers look upon as a power-hungry monster bent on

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cornering the whole business. One by one, these would be difcult problems to solve. But as a series of interrelated challenges, they constitute a full-blown crisisa climate change as unpredictable as it is inevitable. And like global warming, it elicits reactions ranging from denial to Darwinian survivalism to determined stabs at warding off disasterattempts not to recapture some long-lost era but to harness new, untapped sources of power. That is, if its not too late. Next: The mom-and-pop shops of publishing's heyday.

Courtesy of Harper Studio)

Flat is not an acceptable position. We are always expected to grow. CAROLYN REIDY, CEO OF SIMON & SCHUSTER In its heyday, publishing was a vast array of mom-and-pop shops, in which the pops tended to be independently wealthy. Their competitive advantage was not efciency or low costs but taste. Maxwell Perkins at Scribner; Bennett Cerf at Random House; Roger Straus and Robert Giroux at Farrar, Straus and Giroux; Barney Rosset at Grove; and Alfred A. Knopf epitomized the gentleman editor as gallerist, snatching up unknown geniuses. One British publisher advised an American at the time: Take lots and lots of gambles, but small ones. So they did. They took poor writers drinking, put them up in their homes, and defended them in court. They made handshake deals, spent their personal wealth in lean years, and built backlists out of modernist classics. Discovering Faulkner was like buying Picassos in 1910. In the early sixties, Knopf sold out to Cerf, who sold Random House to RCA, and the era of consolidation began. Formerly independent publishers shriveled into mere imprints of massive corporations. Knopf became part of Random House; so did Doubleday and Bantam and Ballantine and dozens of still smaller shops now distinguished mostly by their names, like corporatized Broadway theaters bearing the monikers of long-gone cigar-chomping producers.

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By the nineties, ve big conglomerates were divvying up the spoils and their lucrative backlists. Many of the smaller companies that had been struggling, like FSG, Ecco, and Crown, were ush with corporate resources. But in exchange, they gave up nal say in how theyd publish their booksor even what books theyd publish. And suddenly an industry accustomed to 5 percent margins was being run by media moguls aiming for double digits. The corporations began by doing what they knew how to do: acquire, expand, diversify, spend. Sign up all kinds of writers, pay some of them a ton, market the hell out of them, see what sticks. It was the nineties, after all. A few books sold spectacularly, but more failed, and in the last ten years, the bill has come due. So today, the order comes down from beleaguered CEOs: More blockbuster books, fast. Which leads to cutthroat auctions and ballooning advances. You cant win big if you dont bet big. Lately, the whole, hoary concept of paying writers advances against royalties has come under question. Following their down payments to authors, publishers dont have to pay a cent in royalties, which are usually 15 percent of the hardcover price, 7.5 for paperbacks, until that signing bonus is earned back. The system is supposed to be mutually benecial; the publishers guarantee writers a certain income, and then both parties share in the proceeds beyond that level. But it only works for publishers if theyre conservative in their expectations. As auctions over hot books have grown more frequent, prudence has gone out the window paying a $1 million advance to a 26-year-old rst-time novelist becomes a public-relations gambit as much as an investment in that writers future. That money has to come from somewhere, so publishers have cracked down on their non-star writers. The advances you dont hear about have been dropping precipitously. For every Pretty Young Debut Novelist who snags that seven-gure prize, ten solid literary novelists have seen advances slashed for their third books. Of course, back in the boom nineties, the corporations themselves were pumping up the expectations of midlist writers. Consider Dale Peck. His rst novel, Martin and John, came out in 1993 to excellent reviews, and by his third book, in 1998, he was, by his own account, wildly overpaid. Books, he says, were like Internet stocks, getting enormous advances without demonstrating any moneymaking whatsoever. Having rarely sold more than 10,000 copies, he took up with superagent Andrew Wylie, developed a reputation for being a diva, and pretty soon couldnt sell a book to save his life. Until he started specializing in genre ctionrst childrens books, then horror. Last year, Peck sold Body Surng, a thriller about demons exiting people through sexual release. Hes now splitting $3 million with Heroes writer Tim Kring to produce a trilogy of conspiracy thrillers. Peck sees an increasingly hostile environment for the kind of books he used to write. When you get $100,000 for a novel, he says, you want $150,000 and then $200,000, so when they pay you $25,000 for the next one, and my rent is $2,500 a month, what do you do? The system works just ne for commercial ction. But for literary ction, I think we had a nice run of it in the commercial world. The good ction that does manage to snag a stratospheric advance is mostly either a follow-up to or a knockoff of a freak hit. The astonishing success of Charles Fraziers Cold Mountain led to a bidding war for his second book, which Grove/Atlantic editor Morgan Entrekin lost with great regret to Ann Godoff at Random Houses eponymous imprint (known as Little Random). Lucky him. The price tag, more than $8 million, might well have sunk Grove, one of the few biggish

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independent houses left, because Fraziers follow-up, Thirteen Moons, sold less than 500,000 copies, according to BookScan. Ann Godoff was red not long after the deal was made. It is possible they broke Little Randoms neck, says one agent. Fraziers wife will not have the luxury to buy another racehorse. Next: Why CEOs can't keep their bosses happy anymore.

But overspending isnt going away, even with a rotten economy. Last month, Harvard economist Anita Elberse wrote a piece debunking the hypothesis of Chris Andersons anti-blockbuster blockbuster, The Long Tail (which Bob Miller acquired at Hyperion for a mere $550,000). Elberse led off with a tidbit from a study of Hachettes Grand Central Publishing. Of 61 books on its 2006 list, each title averaged a prot of almost $100,000. But without the top seller, which earned $5 million, that average drops to $18,000. A blockbuster strategy still makes the most sense, she concludes. Its inherently risky, though. You have to wonder about the prospects for one new book that Elberse had her students case-studyDewey: The Small-Town Library Cat Who Touched the World. Grand Central, inspired by the best seller Marley & Me, is betting on the new mini-genre of cat-related nonction. Grand Central initially offered $300,000, then went up to $1.25 million. Gobs more will be spent on marketing. Youll likely be hearing about Dewey when it comes out this month, and if half a million of you still feel that you cant get enough heartwarming pet stories, it just might earn back its advance. So publishing ends up looking like a mini-Hollywood, but even more dependent on sleeper hits and semi-reliable franchises. Dan Browns The Da Vinci Code buoyed Random House tremendously in the past ve years, but with Browns sequel delayed, sales were down 5.6 percent last year. When Simon & Schuster announced that sales were off almost 10 percent in the rst half of 08, it cited the 2007 success of The Secret as the reason for the relative shortfall. Other

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companies did betterbut on the strength of surprise hits. Sales grew 11 percent both at Penguin and at Hachettes U.S. division, largely on the backs of two authorsOprah-touted self-helper Eckhart Tolle at Penguin and Stephenie Meyer at Little, Brown. Morgan Entrekin remembers meeting Larry Kirshbaum, then-CEO of Time Warner Books, right after two of Kirshbaums books had been anointed by Oprah in 1999. Its like winning the lottery twice, says Entrekin, but Larry didnt seem that happy. He said, Now my bosses are going to expect me to do better next year. Kirshbaum eventually left to become an agent. If someone like Jane Friedman cant survive the industry, who can? AN EDITOR AT A HARPERCOLLINS RIVAL The ideal publishing CEO can read vertically and horizontally, in the words of ex-Penguin CEO Peter Mayer. But even those who clearly can do both, like Jane Friedman, seem powerless to keep their bosses happy. Friedman had an odd retirement party. It was thrown not by her former employer, HarperCollins, but by her rival and close friend, Doubleday publisher Steve Rubin. The turnout for mid-August was impressive: Power agents Amanda Binky Urban and Mort Janklow and legendary editors Sonny Mehta, Gary Fisketjon, and Dan Halpern all converged on Rubins elegant roof deck off Central Park West. They surprised the guest of honor by wearing disturbing Jane Friedman masks. Friedman herself gave a deant speech insisting that it wasnt a retirement party at all. Books mean civilization, she said, perched on iron steps that resembled a barricade from Les Misrables. Later she proclaimed, I am not done, and I am not done by a long shot! Friedman was an emblem not of publishings genteel old days but rather its postmillennial mediaand tech-savvy era. She came up through publicity at Random House, and over a decade as CEO, she turned HarperCollins from a oundering beast into the businesss tightest, shiniest ship. She also attended personally to writers. She had such a good relationship with Michael Crichton that he followed her from Random House to HarperCollins. Yet a few days after being the belle of the industrys annual confab, BookExpo, held in L.A. last spring, she went into Rupert Murdochs ofce and was told that her own protg, Harper No. 2 Brian Murray, was replacing her. As one editor puts it, She went over there thinking they were going to discuss [her] contract, and instead she got a two-by-four across the face. Friedman was never known as a gentle soul, but her brutal resignation spooked the industry. What exactly had she done to deserve this? HarperCollinss recent numbers were down but had recovered reasonably by June. With both parties refusing to comment, theories abounded, the most plausible of which is that Murdoch thought she had become more noise and trouble than she was worth, running a part of his conglomerate that, relatively speaking, isnt worth all that much to him. There was her messy dismissal of Judith Regan following the O. J. debaclea tabloid event that dovetailed too well with Friedmans reputed love of publicity. Murdoch, people at the company say, didnt like seeing Friedmans name all over the papers. Next: The complex proposition of maintaining marquee writers. Murray looks to be a less conspicuous character. He promises to continue Friedmans innovations, and to accelerate a worldwide expansion of the business. We have a green light from News Corp. to invest in our business, he says. Friedman, meanwhile, is said to be mulling an Amazon consulting gig. The new face at the top of Random House, who replaced Peter Olson as CEO the week before

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Friedman left, is 40 and has never worked in book publishing before. Markus Dohle, a veteran of Bertelsmanns printing business, cuts quite a different gure from, say, dapper, laconic Knopf editor Sonny Mehta, a man whos survived many a CEO and is said to have shrugged comically when he found outvia the New York Timesthat Olson was out. Its like Dohles 27 years old: He sort of bounces on the balls of his feet the way college athletes do, says one longtime industry observer. Dohle has spent the last three months on a listening tour, and his subjects nervously await the results. So far, many prefer his demeanor to that of Olson, a man whose voracious reading failed to make up for his coldness (an in-house joke was that he was a Swede pretending to be a German). But managerially, Olson had one saving grace. He left people alone, says the industry observer. But [Dohle] doesnt come out of a tradition of editors as geniuses who need to be left alone in a room to smell manuscripts and decide on them. Random House had a weak 2007, and publishing sources say Olson didnt do enough to eliminate its endemic inefciencies. Imprints are still allowed to bid against each other for books, thus driving up prices, and every one of them has a major problem or two. Little Random has been without an ofcial editor-in-chief since Daniel Menaker left last year. Doubleday, postDa Vinci Code, is overextended. And two of Randoms down-market imprints, Crown and Bantam, are said to have dragged down past earnings; Bantam Dell head Irwyn Applebaum is a frequent object of anticipatory Schadenfreude. When business is slow, tongues are fast, responds Random House spokesman Stuart Applebaum, Irwyns brother, declining a request to speak to Dohle and calling the speculation fantasy-league Random House. He says there is zero change at the imprints, and that Bantam consistently delivers some of the companys biggest-selling hardcovers and paperbacks. Dohle has been popping into editorial marketing meetings, something Olson almost never did. At the end of July, Mehta brought Dohle as a surprise guest to a Knopf meeting. Looking over a sales spreadsheet, he muttered to Mehta, This isnt how the other imprints do it. Editors who were called in during the meeting hadnt all been told Dohle would be there. One such editor, herself a former executive, said of a book with disappointing sales, Its dead in the water. Dont worry about it. Another person in attendance says, You could see Dohles eyebrows going, Oh boy, that was candid. What was his take on the proceedings? Where would these little observations lead, and how would they affect the people in this room? No one yet knows. I think agents often like for there to be problems, because they can be the stalwart support behind a writer. GARY FISKETJON, KNOPF EDITOR The blockbuster era makes retaining marquee writers an increasingly complex proposition. Back when Groves Barney Rosset was boozing around Paris with Samuel Beckett, agents were adjuncts, the ones who handled the details (in fact, Rosset became Becketts agent too). The editor, both best friend and midwife to genius, had it made. The pay was awful, but what company! And all in the service of art. We publish authors, not books, FSGs people like to sayand for decades, through best sellers and duds, great writers and prestigious publishers were inseparable. Some still are: Philip Roth, thus far, has stuck by Houghton Mifin even after its painful merger with Harcourt. John Updike, at Knopf, doesnt even have an agent. But early this year, two of publishings tightest bonds were broken. Richard Ford left Knopfs star editor, Gary Fisketjon, for Dan Halpern at Ecco (Binky Urban, the agent who handled Fraziers deal, did this one, too). And, after 42 years at FSG, Tom Wolfe left for Little, Brown.

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Fisketjon, renowned for his close friendships and even closer edits (Raymond Carver, Cormac McCarthy, et al.), was more than Fords editorhe and the novelist would kill furry animals in the woods together, as one colleague puts it. But doing business together had become tricky. Fords literary reputation and popularity had fallen out of alignment; his last book, The Lay of the Land, sold less than 100,000 copies, per BookScan. Slow-and-steady Knopf didnt seem fazed, but the author himself was. He thought house enthusiasm had waned, and he never felt the money was commensurate with the work that was produced, says the colleague. It couldnt have been easy when the Lauren Weisbergers of the world were getting better deals than he was. Hes 64, looking for that one last score in the literary world. Knopf offered Ford roughly $750,000 per book, at which point Mehta capped the money, according to the source; Ecco offered $3 million for three books. Next: The sinking morale of editorial staffers. Others say that Ford had simply grown unhappy with Fisketjons editing. Cormac McCarthy left Fisketjon, too, but he stayed with Knopf and had Mehta edit him. When Ford decided to leave, says the source, he left Fisketjon a phone message explaining his move. It was never returned. He sent a follow-up e-mail, which Fisketjon answered with a surly note. Only Ford and Fisketjon know what exact words were exchanged (and both refuse to comment on their relationship after the move), but Ford later told someone that Gary has to learn hes no longer in high school. This was business, after all. Tom Wolfe kept FSG aoat in its last decade of independence with The Bonre of the Vanities, but Jonathan Galassi shrugs off making him a lowball offer earlier this year. Little, Brown paid about $7 million for his next novel, a Miami race parable, after Galassi reportedly balked at an early request for $5 million. We went through a court dance, says Galassi. Everyone acted their part, and the result could have been predicted from the beginning. Wolfe says his divorce was cordial, noting that 42 years is a lot of loyaltywhich, by the way, is a two-way street. Making a living as a writer is much more like Protestantism than Catholicism. In the Catholic Church you built up your bank account through some good works, even if youve had terrible sins. A close friend of Wolfes says it wasnt about Galassi, it was about Roger Straus, the charismatic old-line chairman of FSG who died in 2004. After Bonre, Random House had offered Wolfe millions to leave Straus, but hed refused. With his old friend gone, Wolfe relied on his most trusted surviving condante: his agent, Lynn Nesbit. Writers looking for a boost from a new publisher would do well to remember the cautionary tale of one Salman Rushdie, exhibit A in the case of Editor v. Agent. Sonny Mehta was his editor; they shared virtually identical tastes and backgrounds, and each had helped the others career. Enter Rushdies agent, Andrew Wylie, in the late nineties, pitching what would become Rushdies 1999 novel, The Ground Beneath Her Feet. Wylie held Sonny up, says a publisher at another house. Sonny said no and [Wylie] said, Well, cheers, were leaving. Despite low sales of Rushdies previous novel, Holt paid $2 million for the new one (plus some paperback rights). It promptly tanked. Rushdie eventually returnednot to Knopf but to Little Random. His career has never been the same. Many agents contend that, with younger editors being laid off or jumping around to start new imprints, the job of nurturing an author has been left to them. You hear every day of an editor

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changing houses, says longtime agent Mort Janklow. J.R. Moehringer [best-selling author of The Tender Bar], I sold him to Hyperion. Two of Moehringers editors left the house. Then Bob Miller decides to leave. This is a young man who writes a book about abandonment! Who does he turn to? The departed publisher?! I take care of him. Meanwhile, morale among many editorial staffers is dipping to all-time lows. Forget literary taste; everything is cost-benet analysis. What Ive heard from editors is, My judgment doesnt count any longer, says Kent Carroll, who left his company, Carroll & Graf, after it was sold to a mini-conglomerate, and who now runs the boutique Europa Editions. There used to be a reason to get into publishing, says Carroll. Whether they know it or not, they all want to be Maxwell Perkins. Its a kind of secondary immortality. They didnt ock to publishing because they want to publish Danielle Steel. Some people say theres not enough marketing done for a book, and I think thats total bullshit. You do the marketing that works, and not much is working right now. PETER MILLER, DIRECTOR OF PUBLICITY, BLOOMSBURY One key advantage of corporate publishing was supposed to be its marketing muscle: You may not publish exactly the books youd like to, but the ones you publish will get the attention they deserve. Yet in recent years, more accurate internal sales numbers have conrmed what publishers long suspected: Traditional marketing is useless. Media doesnt matter, reviews dont matter, blurbs dont matter, says one powerful agent. Nobody knows where the readers are, or how to connect with them. Fifteen years ago, Philip Roth guessed there were at most 120,000 serious American readersthose who read every nightand that the number was dropping by half every decade. Others vehemently disagree. But who really knows? Focused consumer research is almost nonexistent in publishing. What readers wantand whether its better to cater to their desires or try harder to shape themremains a hotly contested issue. You dont have to look further than the pages of The New YorkTimesBook Review or the shelves of Borders to see that the market for ction is shrinking. Even formerly reliable schlock like TV-celebrity memoirs doesnt do so well anymore. And the next thing, as Publishers Weekly editor Sara Nelson notes drily, is not bloggers writing books. Next: How sales people are dealing with Borders, Barnes & Noble, and Amazon. Marketing a book these days is like playing a slot machine; hitting one 7 wont get you a dime. There has to be this constellation of events, says Daniel Menaker, whose departure was tied in the press to the low sales of Benjamin Kunkels much-ballyhooed debut novel, Indecision. Not only a Times Book Review front cover but Don Imus talking about it and Ellen Pompeo actually reading the book on-camera. And Barack Obama has just bought it. Its plausible that publishing would already be in the red if it werent for Oprah. And she is reportedly going off the air in a few years, says former Simon & Schuster CEO Jack Romanos. The most effective marketing tool they have for a book isnt going to be there. If I were still there, I would be guring out, now, different and better ways to market in anticipation of that being taken away. This would mean far more than just the few book trailers you see online. Theyre all the rage right now, says Bloomsburys Peter Miller, but I would love to see an example of one video that really did generate a lot of sales. Theres a sense of desperation.

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We just dont know what our business looks like without Borders. And thats terrifying. Theres just no way of getting around it. SIMON LIPSKAR, AGENT If you think marketing is impossible, talk to the people in sales. Their jobforcing books into a shrinking handful of outletsinvolves all the supplication of publicity without all the fun and free booze of book parties. And it has the added bonus of bleeding their companies dry. Borders Group, which controls 10 to 12 percent of the bookselling market, is on death watch, putting publishers in an even less enviable negotiating position with bookstores. The remaindering and shredding of booksa cost borne largely by the publisheris a relic of a consignment model developed during the Depression that makes no modern sense. Publishers also pay for placement in big bookstores, which they call co-op, under a complicated arrangement meant to cover up the fact that its payola (or, as some call it, extortion). Those 300 copies of, say, American Wife stacked precariously at the entrance? Bought and paid for by the publisher. You feel raped having to pay for placement in a store youre selling to, says an agent. But at least with two major chains, you can play one against the other. Even in its weakened state, Borders can still boost a book into best-seller contention. If something is selling well at Borders, a publisher can pressure an increasingly stingy Barnes & Noble to reorder. If Barnes & Noble absorbed Borders business, it would control 30 percent of the marketversus 10 percent for all the independents combined, with big-box retailers and Amazon controlling most of the rest. (At its nineties peak, the indie-only American Booksellers Association had 4,700 member stores; today it has 1,700.) This matters because the following response from Barnes & Noble CEO Steve Riggio is only technically true: We buy every title publishedour business is a long-tail businessless than 5 percent is from bestsellers. Editors insist that plenty of books get skipped. Richard Nash, head of indie publisher Soft Skull Press, estimates that one in twenty are passed over, though ten to fteen copies are shipped into their warehouses in case theres a special order. Many more are getting smaller initial orders than ever. Thats a very long, very skinny tail. Barnes & Noble, briey interested in Borders, has since recanted. Recently William Ackerman, a major Borders shareholder, suggested they should sell to Amazon instead. That probably wont happen, but his reasoning is clear. Barnes & Noble is old news. Amazon is the future. The fear of Google [BookSearch] is ridiculous paranoia. The fear of Amazon is enlightened self-interest. MIKE SHATZKIN, BOOK-INDUSTRY CONSULTANT Attendance at this years BookExpo was way down, but you wouldnt have known it if you were among the 700-odd people at a presentation by Amazon CEO Jeff Bezos. Lean, wiry, shavenheaded, and big-eared, Bezos talked up the Kindle, the new e-reader that may or may not account for 1 percent of the book market. No one knows. But while bookstore sales were to drop 7.1 percent that month, Amazon was on its way to 31 percent sales growth (albeit for all media products) for the second quarter. The audience greeted Bezos warily: His sleek, West Coast style made Jane Friedman look like Vladimir Nabokov. In a Q&A session billed as Upfront and Unscripted, none other than Chris Long Tail Anderson quizzed Bezos on his plans. He couldnt get many straight answers (though Bezos was delighted to discuss the suborbital space vehicle hes working on). How many books would Bezos like to have available on the Kindle? Well, I probably wont be happy unless we have 20 million, but

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Im hard to make happy, he said, and then let loose a honking laugh. Next: Will the Kindle be the iPod of books? Publishers have been burned by e-book hype before. A few years back, analysts were predicting wed all be reading novels on our Palm Pilots. Barnes & Noble even began selling e-books. Though it doesnt quite look the part, Bezoss chunky retro Kindle is the closest so far to being the iPod of books. In mid-August, a Citigroup analyst doubled his estimate for this years sales of the readersto almost 400,000. Why werent publishers elated? Whats wrong with a company that returns only 10 percent of the books it buys and might eventually eliminate the cost of print production? Well, it doesnt help that Amazon, which has been on an intense buying spree (print-on-demanders BookSurge; book networking site Shelfari), lists publishers as its competitors in SEC lings. Editors and retailers alike fear that its bent on building a vertical publishing businessfrom acquisition to your doorstepwith not a single middleman in sight. No HarperCollins, no Borders, no printing press. Amazon has begun to do end runs around bookstores with small presses. Two new bios from Lyons Press, about Michelle Obama and Cindy McCain, are going straight-to-Kindle long before publication. Amazon, in short, plays hardball. When Hachette Livre UK couldnt come to terms over Amazons U.K. payments, Amazon removed the BUY NEW button from its listings for the companys key books. Hachettes CEO responded with an open letter, saying, Amazon seems each year to go from one publisher to another making increasing demands in order to achieve richer terms at our expense and sometimes at yours. The ultimate fear is that the Kindle could be a Trojan horse. Right now, Amazon is making little or nothing on Kindle books. Lay down your $359 and you can get most books for $9.99. Publishers list that same Kindle version for about $17.99, though, andas with all retailerscharge Amazon roughly half that price for it. Which means that Amazon keeps only a dollar on each book, while the publishers make $9. But Amazon may be offering a sweet deal now in order to undercut publishers later. If their low, low prices succeed in making e-books the dominant medium, they can pay publishers whatever they want. The concern is they want to corner the market, explains one books executive, and then force publishers to accept a genuine 50 percent discount. If they took over as little as 10 to 20 percent of the market, says an agent, publishers simply would not be able to exist. Were an industry more willing to watch the boat sink than rock it a wee bit. ONE FRUSTRATED PUBLISHER While many in publishing wait in their bunkers, HarperStudio and a few others forge ahead. Back in February, Bob Miller and Jane Friedman met at the bar of the Omni Berkshire hotel for one of their freewheeling chats. How would you do it differently if you could start all over again, she asked him. He said hed try to reduce advances and returns, put out only a few books, and focus on cheap Internet marketing. Why dont you do that? she asked, and within a week they had a deal. Miller has worked out separate contracts, co-op and all, with booksellers and authorscapping advances at $100,000 and reducing returns. Their list now includes not just 50 Cent but Michael

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Eisner, his former boss at Hyperion; John Lithgow (a memoir); and Isabella Rossellini adapting her short-lm series on bug sex. All these authors will contribute to their own pre-publication marketing. Miller doesnt wait for agent submissions, instead accosting writers at conferences, telling them how much more a writer can make under 50-50 prot-sharing. Hes even throwing in something literary, 22 previously unpublished stories by Mark Twain, who, Miller points out, ran a protsharing publisher that made a killing on Ulysses S. Grants memoirs. If he were alive, this is exactly the deal hed want, Miller says brightly. Other industry folk, while supportive, note that precious few writersexcept those with trust fundswould forgo advances, and that it generally works best for those who have a pre-existing fan base that will gobble up their books. As for Millers other key ingredients, prot-sharing is not a new concept, and online marketing is catching on everywhere. If theres anything Miller shares with the departed Friedman, its a knack for making restructuring look like revolution. But in a business as illogical as publishing, maybe it is. One indie publisher has been pitching an imprint around town that would go beyond what Millers doingexpanding into print-on-demand, online subscriptions, maybe even a salon for loyal readers. He envisions a transitional period of print-on-demand, then an era in which most books will be produced electronically for next to nothing, while high-priced, creatively designed hardcovers become the limited-edition vinyl of the future. I think they know its right, the publisher says of the executives hes wooing, but they dont want to disrupt the internal equilibrium. Im like the guy all the girls want to be friends with but wont hop into bed with. Nearly all of these new ideas already exist in some form or another at independents like Dave Eggerss brainchild, McSweeneys. But can they survive inside a corporate, blockbuster-bound culture? You cant turn a camel into an alligator, says longtime agent and former Grove editor Ira Silverberg. Id rather we have several soft years when investors get out and people who care about the values in the business reinvest. But going back in time isnt an option. A hundred Bennett Cerfs wouldnt save the current publishing modelnot without a hundred Bob Millers puzzling out the way forward, unhampered by fear or complacency. The kind of targeted, curated lists editors would love to publish will work even better in an electronic, niche-driven world, if only the innovators can get them there. Those owners who are genuinely interested in the industrys long-term survival would do well to hire scrappy entrepreneurs at every level, people who think like underdogs. Itll be rough going in the meantime; some publishers will transform, some will muddle through, some will die. And there will, no doubt, be a lot of editors for whom even this diminished era will look like the last great golden age, when some writers were paid in the millions, some of their books produced in the millions, and more than half of those books actually sold. Book publishing is still a big-league business, and thats a hard thing to let go of. Theres something terrible, says an editor at a prestigious imprint, about admitting that youre not a mass medium. Next: Notorious book ops of recent years. Books Gone Bust Lots and lots of books havent earned out their publishers advances, but a hallowed few have attained the status of legendary op, the kind of object lesson in the dangers of literary

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hyperventilation that too many presses still ignore. Here are the most notorious of the past few years and what theyve cost their publishersassuming that published accounts of their closely guarded (embarrassing) advances are accurate, that BookScan accounts for two-thirds of total sales, and that one book sold earns out about $4.50 of the advance. THE GLASS BOOKS OF THE DREAM EATERS by Gordon Dahlquist (Bantam; August 2006) Suspense with literary ambitions is catnip to acquiring editors, but this one proved too long and muddled for most thriller fans. Better luck with the next novel. Advance $2 million in a two-book deal Initial Print Run 120,000 Copies Sold (per BookScan) 22,000 Advance Unrecouped $851,500 for the rst book THIRTEEN MOONS by Charles Frazier (Random House; October 2006) Publishers salivated at auction over the follow-up to debut smash Cold Mountain. The winner, Random head Ann Godoff, gambled against the sophomore curseand lost. Advance $8 million Initial Print Run 750,000 Copies Sold (per BookScan) 368,000 Advance Unrecouped $5.5 million SACRED GAMES by Vikram Chandra (Harper; January 2007) A big statement buy for Jonathan Burnham, whod recently arrived from Miramax Books. More literary than suspenseful, it was close to brilliant but 928 pages long. Advance $1 million Initial Print Run 200,000 Copies Sold (per BookScan) 51,000 Advance Unrecouped $655,750 BRIGHT SHINY MORNING by James Frey (Harper; May 2008) Both an economic and a moral gamblethat the famous liar could be rehabilitated through bona de ction. Critics were mixed; readers spoke as one. Advance $1.5 million Initial Print Run 300,000 Copies Sold (per BookScan) 65,000 in hardcover Advance Unrecouped $1.06 million Next: This years big publishing gambles. Place Your Bets! This years big gambles are typical; two authorized bios, a literary doorstop with crossover ambitions, and an animal memoir in the tradition of a past blockbuster. Will a sufcient number

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of readers be enticed? Well know soon enough. THE GARGOYLE Andrew Davidson (Doubleday; August 2008) Advance $1.25 million Initial Print Run 125,000 Publishers Sell An extraordinary debut novel of love that survives the res of hell and transcends the boundaries of time. Caveat In its rst month of release, its done well but never broken the top ten, and its slated to fall off the 35-book extended Times best-seller list next week. DEWEY: A SMALL-TOWN LIBRARY CAT WHO TOUCHED THE WORLD Vicki Myron with Bret Witter (Grand Central; September 24) Advance $1.25 million Anticipated Print Run 250,000 Publishers Sell Marley & Me meets The Bridges of Madison County in this heartwarming true story. Caveat Everyone loves heartwarming stories about animals who teach humans the joys of life, love, and how to properly catalogue library booksparticularly animals that have already taken the Big Catnap. Still, its a lot of money. THE SNOWBALL: WARREN BUFFETT AND THE BUSINESS OF LIFE Alice Schroeder (Bantam Dell; September 29) Advance $7 million Anticipated Print Run 1 million Publishers Sell The legendary Omaha investor has never written a memoir, but now he has allowed one writer, Alice Schroeder, unprecedented access. Caveat Buffett was interviewed for the book, but has not committed to appearances promoting it. Without him, two million copies is a big hill to climb. BUILT TO SUCCEED Michael Phelps and a still-unchosen co-author (Free Press; December 16) Advance $1.6 million Anticipated Print Run 500,000 Publishers Sell Phelps will reveal the secrets of his success, taking us behind the scenes of his approach to training, competition and winning. Caveat After three months of overexposure, will anyone care?

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