The Unexamined Life is Not Worth Living

This famous dictum by Socrates can be interpreted many ways.  He was a philosopher and it may be that philosophy is indeed the basis for all creative arts, and even the sciences, man’s attempt to come to grips with our place in an endless universe, the meaning of life, and its corollary, death.  When the 400-year-old King Beringer is told at the beginning of Eugene Ionesco’s play, Exit the King, that he now has only 90 minutes to live he rages “why was I born, if it wasn't forever?”

We live in an age of media overload, social, graphic, narrowcasting political views, and instant gratification on cell phones, iPads, and "reality" TV shows.  There are so many “streaming” choices that one’s inner life is suffocated.  Maybe that’s the point of it all, numbing us all into a somnambulistic state so we don’t have to do the hard thinking, just be an obedient lot of consumers.

More than ever we need the arts to find our moral compass, to return to examining one’s life.  Perhaps that is why the theater has become a centerpiece of my blog over the years, particularly the plays produced right here in my own backyard by Palm Beach Dramaworks.  It is among the best regional theaters in the United States, and although there are other good theaters nearby, none have been as consistently adept in their choice of plays, actors, and in their execution as Dramaworks.  It rivals New York and the West End.

Having reviewed so many plays of theirs over the past several years, missing just a few summer productions while we’re away, as an ex-publisher I thought it might be interesting to pull them together into an eBook PDF, something more navigable than going through the BlogSpot site. The software for doing this is not very flexible, thus including entries where Dramaworks is merely mentioned.   As such, some of our personal life, as well as an occasional review of other theatres’ productions, and even a few book reviews get commingled.  Fortunately, there are not many.  The vast bulk is indeed the “history” of Dramaworks during the period. 

What results is a 200 page PDF, easily downloadable into iBooks and therefore readable off line.  I brought my iPad on a recent Caribbean cruise (more on that in a later entry) and thought I’d just look over the results and instead I ended up reading it virtual cover to virtual cover.  I had feared a lot of redundancy.  After all, how many different ways are there of praising a play and performance since PBD’s productions have been uncommonly exceptional? (There are some reviews on my site of other theatre productions which are negative, so it’s not as if I don’t have a critical bone in my body.)

But it seems to come across without much literal repetition and most of the impact reading it as an eBook is from the sheer energy and enthusiasm that went into these reviews, not from any particular “review skill acumen.”   It’s all part of buying into Dramaworks’ vision:  “To enhance the quality of life through the transformative power of live theatre.”  Full circle back to the “examined life.”

Interestingly, the very first entry in the collection, published in November 2007, is entitled Literature and Family.  It is one of those entries that is not a review of a Dramaworks play although one paragraph does cover their production of The Subject Was Roses.  Most of the entry could serve as a fitting introduction to this collection as so much great literature and theatre is about family. That entry taps into some of my own family “secrets.” As Tolstoy said "happy families are all alike; every unhappy family is unhappy in its own way." Literature and Family concludes with an essay about my father.  It explains a lot about how I made the journey to the very words you are reading at this moment.

Finally, I thank the PBD professionals who are really responsible for the contents of this document, and in particular, Dramaworks’ founders, William Hayes, Producing Artistic Director; Sue Ellen Beryl, Managing Director; and Nanique Gheridian, Company Manager. 

The PDF of the Dramaworks Retrospective by Robert Hagelstein is available here:

https://tinyurl.com/y7e8ufr2

eBook War of Words

A follow up to Publishers in the Crosshairs, hopefully a more carefully considered one. The eBook wars are far more complicated than imagined. I quoted Mike Shatzkin from the Financial Times piece, but since then I’ve had enough sense to venture into his blog, specifically his expert report, The wild weekend of Amazon and Macmillan, which in turn led me to Tobias Buckell’s Why my books are no longer for sale via Amazon and Charlie Stross’ Amazon, Macmillan: an outsider's guide to the fight. These lengthy pieces, with their fascinating threads of responses, are must reading, something I might have done in the first place.

I should have known that publishers would find ways to make things hopelessly complex. Any industry that can base its selling strategy on first publishing a high-priced edition, overprinting the same in the hope a lower unit cost will justify a lower list price, and then take back the majority of what has been printed as returns, trying then to resell them on the bargain books table for pennies on the dollar, while, at the same time, issuing a lower-priced paper back edition, has to be suspect to begin with. The eBook wars have become enmeshed in legacy marketing practices such as “agency plans” and inconsistent methods of compensating authors on the sale of such editions (percentage based on “list price” or the net selling price, and/or whether the “agency” discount figure into the same). Then, digital rights management further complicates the issue.

When things become hopelessly complex, simplify. One option is to go to a “net pricing” scheme for eBook editions sold to the retail marketplace through intermediaries and then let the marketplace work; perhaps that price being similar to the eventual paperback list price. Of course, marketing structures and royalty arrangements would have to be engineered with that approach in mind, so there is no short-term silver bullet, and it does not "prevent" Amazon from pricing at less than it is paying the publisher. One has to wonder whether such a publishing practice is even legal or Amazon’s pricing is sustainable. But, I defer to the blogs mentioned above on this subject, following them with great interest, as the eBook wars no doubt escalate. As a society, we can only hope that a negotiated peace does not come at a price too steep for the publishing industry.

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The Ancient Library of Celsus

Publishers in the Crosshairs

Maybe it’s because I’ve been on the periphery of the industry for a while, the salad days of my publishing career behind me, but being a firm believer that information, especially vetted information, has value, publishers seem to be having a chicken-little moment at this stage of technology evolution. I can’t help but hark back to the 1960’s when publishers and libraries were fearing that Ultrafiche, a microfiche that holds up to 1,000 pages per 4x6" sheet of film, would make the printed book redundant. So fast-forward to the brave new world of the 21st century.

No doubt today’s technology is a form of creative destruction that Ultrafiche was not. But the operative word here is creative and publishers bring something valuable to the table, gathering and authenticating information at the higher end of the information pyramid and editing, designing, promoting and distributing trade books at the lower end. I’ve always thought of publishing as an information pyramid, the top of which is “must have information” – mostly scientific and professional – and at the bottom, the kind of publishing which is mostly the mass market stuff competing with movies, magazines, and other leisure-time activities. In the information pyramid there are various categories in between, such as educational publishing, serious trade publishing, etc. The higher in the pyramid, the less price sensitive and visa versa. To a great extent, this applies to electronic distribution as well.

Monday’s Financial Times presented an interesting analysis of the publishing industry’s present predicament, eye opening because it made clear that Amazon, to build market share and ward off the rapid encroachment of Apple and Google, was selling their $9.99 eBooks at a loss. Macmillan’s move to delay eBook editions of new titles by six months was to “force” Amazon to charge more, which Amazon capitulated on, not because of one publisher’s demands but because the announcement of Apple’s iPad threw down the gauntlet of real competition for the Kindle. I thought competition was supposed to drive down prices. Otherwise, the whole matter suggests a form of price fixing.

While publishers might find a $9.99 electronic book unsustainable (if that is their own list price) as, after all, the vast majority of the costs are those incurred in creating the first copy (paper, printing, and binding being a minor part of the expense in publishing), Amazon’s selling at that price is another matter. How long can Amazon sustain pricing that is less than publishers’ charge Amazon, particularly as Apple and Google enter the competitive fray? Aren’t publishers playing a dangerous collusion game “forcing” resellers to charge a particular price? Publishers need to set their list prices for printed and electronic editions, establish a sensible discount schedule to resellers (both price and discount dependent on where the book/information stands in the information pyramid), and then let the marketplace work. Their control of copyright allows them to have this power. It’s not a matter of “negotiating” prices with resellers, but, instead, ensuring they (publishers) don’t fall into the same trap as the music industry, taking safeguards with distributors to guard against unlicensed replication of eBook editions.

According to Mike Shatzkin (quoted in the FT article), “Legacy publishers still want bookstores to last as long as possible. Their business model is built on their expertise in navigating that industry.” No doubt that is true; even though that legacy system is fraught with its own economic problems such as allowing “returns” of unsold copies for up to a year, an archaic business practice that bookstores and publishers seem to be addicted to. However, be it legacy publishing, electronic, or forms yet to be discovered, it is the publishing industry’s need to adapt, not to retard progress. Otherwise, “their failure to recognize that their industry’s economics is of no concern to the marketplace [will be] another nail in their coffin.”

Perhaps the trade book publishing industry needs to be led out of the woods by more innovative independent publishers, with important, influential authors seeking those venues, deserting the present publishing oligarchy that imagines it can control how the resellers should price their publications. Instead, control the timeliness, presentation, and relevance and accuracy of content, bringing together the author and the reader, in any form the marketplace needs.

Of course it is a more complicated matter, within an even larger picture if you take into account the desirable survival of the independent bookstore, the strategic deployment of on-demand publishing by publishers, and how authors, particularly the best-selling authors, look at the eBook – is it a subsidiary right of which they require a larger piece of the action, such as they receive from the sale of movie rights, or even hold the right to themselves to negotiate their own deals with Amazon, Apple, etc.?

Independent bookstores could be compensated for eBook downloads in their own Wifi hotspots – provided publishers and electronic distributors cooperate and agree to give up a little of the pie, as sellers do to Google for eyeballs that lead to sales. It is in the best interests of the industry to ensure the independents’ survival and they can have a role.

Publishers could more often deploy on-demand printing, especially for the so-called mid-trade edition, or do shorter edition runs and then opt for on demand subsequent editions if warranted. This strategy would reduce part of the publisher’s risk.

Authors have to realize that having a multiplicity of publishers and distributors is in their best long-term interests. Reserving eBook rights for themselves to negotiate with electronic distributors will have an impact on publishers’ ability to produce and promote printed editions. Are we, as a society, better off without legacy publishing in any form?

One of my friends and mentors, the late Len Shatzkin (Mike Shatzkin’s father) said it best in his book In Cold Type; Overcoming the Book Crisis (published in 1982 – the industry has always been in crisis!): “Any misfortune for book publishing is a misfortune for all Americans. Books are too important to our lives; we cannot be indifferent, or even casual, about what happens to the industry that produces them.”
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Book Publishing Roulette

Unfortunately this is not the first time that I’ve said something negative about my industry. I am particularly bewildered as to how some giant trade publishers seem content to play Russian Roulette, thinking they can stem the tide of the migration from print to digital by simply going into a hissy-fit and refusing to issue e-book editions until the hard cover edition has had several months in the market without “competition.” Their failure to recognize that their industry’s economics is of no concern to the marketplace is another nail in their coffin. Strong independent publishers have an opportunity to pick the bones of behemoths such as Simon and Schuster and HarperCollins who, along with Hachette Book Group, have announced their intention to delay the publication of e-book editions until their higher-priced hardcover editions have had several months in the marketplace. “Each publisher voiced concern that the popularity of cheap, $9.99 e-book best sellers available simultaneously with new hardcovers endangers the publishing industry's future.”

Instead they should be embracing the policy of “any-time-any-place” publishing – delivering the goods to the consumer whenever he/she wants it and in any form. There may have to be price disparities for different formats. Certainly the more a title is aimed at the consumer (trade), rather than at someone who needs information to do a job (professional), the digital edition price might undercut the hardcover. But do they really think that they can control the digital tsunami? The only thing endangering “the publishing industry’s future” is the misguided policies of trade publishers themselves.

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You Get What You Pay For

Malcolm Gladwell’s “Priced to Sell; Is Free the Future?” in the recent issue of the New Yorker brings up fascinating issues, ones I dealt with my entire career – should “information” be “free.” Part of his article is a critique of Chris Anderson’s new book, Free: The Future of a Radical Price,”which argues that given the inexorable downward price pressure in technology, there is an inevitability that the content itself will become free. Anderson suggests that musicians learn to make their money “through touring, [and] merchandise sales” and newspaper writer retool to become coaches to unpaid writers who will work “for non-monetary rewards.” Fame, crumbs?

No doubt the newspaper industry is under siege, and is probably the most threatened during this Great Recession. But Gladwell’s scathing dissection of the YouTube “business model” points the way to the inevitability of two universes, a subscription model such as the successful Wall Street Journal, one that offers a level of professionalism or specialization people are willing to pay for and then the free one like YouTube, a commodity aimed at a mass market, supported either by advertising or by the provider being satisfied by cornering market share/eyeballs (Google in the case of YouTube).

The New York Times had attempted a subscription model for its Op-Ed Columnists, miscalculating that this is the unique value of the Times. That value, though, as with the Washington Post, is its gestalt and by charging for a part of the paper and not all is to devalue the sum total of its parts. Pay per view is not feasible but dedicated followers will pay for access to such well established icons.

Similarly, newspapers that do not have a national standing, have an opportunity to expand their coverage of local issues – to create the specialization needed to buttress their own brands. Of course, content is not the only issue, it is the subscription model itself. Giving print subscribers nearly free access to the on line version is one approach, particularly as technology such as the iPad become ubiquitous. The pricing of an online version (only) is the more critical issue for these publications, and that will be dependent on their own distinctive market position. The devil is in the details, but Gladwell’s article is a good reading.

Plastics and Publishing

The commoditization of publishing due to the convergence of trade publishing and other forms of entertainment in a digital age is just but one nail in the coffin of the industry. Even non-trade segments of the industry, such as professional and educational publishing, are struggling with issues of digital delivery, and they have also been caught up in the same financial contagion sweeping Wall Street. These publishers have reacted by cutting their lists, reducing staff, and delaying the signing of new contracts and product development, the same kind of short-term thinking prevalent in American business.

The publishing industry seems to be at an inflection point, with the “trade” part shrinking, fighting all other forms of entertainment proliferating on line, via the Ipod, even the cell phone, cable TV, Netflix, etc. and, now, the emergence of Amazon as a publisher in its own right via its Kindle e-book reader, and educational publishing changing slower than it needs to in order to make the Web more of an opportunity than a threat. Somewhere between the space of the large media publishing organization and the small on demand publisher there would seem to be an opportunity for the strong independent publisher.

Here a just some of the recent developments to consider:

▪ HarperCollins, Houghton Mifflin Harcourt, Penguin Group, Random House and Simon & Schuster have all announced salary freezes or layoffs, or both.

▪ As of October book sales fell 7 percent compared with the same period the previous year.

▪ Houghton Mifflin Harcourt has put a freeze on acquiring most new titles for its trade division while HarperCollins has closed its nonfiction division.

▪ Even the venerable Oxford University Press, the largest university press, laid off 60 people from its US operation, almost a tenth of its staff.

▪ Amazon has ramped up the manufacturing of a new version of its Kindle reader and acquired a new work by Stephen King that will be published exclusively (initially at least) on the Kindle.

The last event is particularly significant. Amazon’s first version is estimated to have sold 500,000 copies. Kindle 2.0 is sleeker, easier to use and even will read the text aloud, still another issue for publishers. While intellectual content is now routinely delivered on the Web, mass-market fiction to date has been the exclusive stronghold of the printed book and therefore the publishing industry. Now best-selling authors can bypass the publisher.

But many publishers are also exposed to the subrogation of internal financing to private equity and the leveraged buyout. By 2006 private equity firms were flocking to the industry:
http://www.boston.com/news/world/europe/articles/2006/08/10/private_equity_eyeing_book_publisher_bids_sources/

A former colleague of mine wrote me: “I’ve always been jealous of those of you who were in publishing during the days when it was different from other corporations. I've become quite disillusioned with the business as a whole, basically because it seems every other day you hear that some great long-time member of the publishing community is being pushed out, and someone who was the CEO of a deodorant company or something is coming in to run things. Next thing you know, that company goes under.”

But mergers and acquisitions and the pursuit of the holy grail of synergy are not new. I was involved in several during my career. The most ludicrous one was early in my publishing days. A small publicly owned conglomerate owned the company I worked for at the time. This firm also had a consumer plastics company. The accountants discovered the "process" of making consumer plastic products was similar to books as you make a master (camera ready copy for photo offset or a mold for plastic products) and from the master you make duplicates. Perfect accounting synergy as you capitalize the cost of the master and write it off during the lifespan of the product. So, we became part of the "Plastics and Publishing" division and in their 1971 annual report our books were displayed along side plastic hangers, dishes, and jewelry cases!

And, publishers managed during other dire economic times. There were serious downturns in the mid 1970’s when the prime rate rose for the first time to double digits, in the early 1980s when Paul Volker ratcheted interest rates to unprecedented levels in response to the CPI reaching almost 15 percent, and a recession in 1991 that resembled the present one (although not as severe) as it was a liquidity crisis. At that time the excesses of the 1980s were in the process of self-correcting. Individuals and state and local governments who leveraged their finances found they were without the funds to even carry on day-to-day operations. Many of these loans were underwritten by real estate values that had simply disappeared.

Today’s debt has now been magnified by a huge multiple thanks to exotic financial instruments, resulting in an even more serious liquidity crisis. My mantra was a publisher should be able to operate “out of a tent,” making the investment in talented people and buying services rather than investing capital in plant and equipment, or, even worse, in unrealistic print runs and pricing, everything to keep financing costs to the minimum. Leveraged finance and publishing are a bad mix.

Long-term thinking is needed in the industry. Or, as another colleague of mine noted: “These publishers are like a group in the desert that decides to camp in place and stop expending energy so their limited water will keep them alive longer. By this strategy they will live a little longer but die they surely will.” This is the time for stronger independent publishers to expand their lists while leveraged corporate behemoths are contracting, if necessary practicing attrition rather than layoffs, seeking new authors while competitors caught in the financial mess are not publishing them. By swimming against the tide, rethinking their role in a digital world, independent publishers can help bring the publishing industry back from stagnation. “Camping in place” is not an option.
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