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.”
.

Witch Hunt Feeding Frenzy

In the interest of full disclosure, we own two automobiles made by Toyota and have owned others in the past. I’m amused by some of the ads from competitors, one comparing its car to the Camry but “admitting” their automobile fails to have one feature of the Toyota: “self propulsion.” (Rimshot drum roll, please.) General Motors is offering an “extra” $1000 rebate on any traded-in Toyota. Transportation Secretary Ray La Hood said that Toyota owners should stop driving recalled Toyota vehicles (later “retracted” but damage done). Open season on Toyota, let the witch hunt begin!

It will be interesting to watch the Congressional Hearings later this month on the topic, the perfect opportunity for our representatives to preen and put a protectionist spin on the “facts.” How convenient to have a foreign car manufacturer to bash while being a business partner of GM. Detroit must be having a field day. Where were the Congressional Hearings when the Ford Pintos were exploding in the 1970s?

Forgotten in all of this is the paucity of incidents leading to the recall. According to Consumer Reports, analyzing complaints for the 2008 model year, there were 52 stuck accelerator issues with Toyota, vs. 36 for the next nearest offender, Ford. (Ford has actually recalled some of its vehicles in China for the same problem.) Both car makers had the same market share so, statistically, Toyota does have more of an issue than Ford, 16 more but we’re talking about millions of cars!

The Toyota issue mushroomed after a widely publicized crash of a Lexus that lead to the tragic death of a family, and that then led to a spike of similar reports, not because there were suddenly more faulty accelerators, but because of the publicity. This is how a witch-hunt is spawned.

I once had the exact same issue with a VW Dasher Wagon, but the National Highway Traffic Safety Administration simply ignored the complaint. I also once had a Jeep Grand Cherokee that would suddenly lose power. After repeat incidents, several near accidents, and multiple trips to the Chrysler dealer, they finally said they couldn’t fix it and as the car was no longer under warranty, it became my problem. (The car was towed away to an auction for parts.)

Of course the present recall and concern is warranted and hopefully Toyota will fix all involved automobiles. But it needs to be put in perspective as anecdotal problems with cars will always occur and the scope of the present issue is fairly limited. Let the so-called “Hearings” begin!

"I have seen too many frightful proofs in court - the Devil is alive in Salem, and we dare not quail to follow wherever the accusing finger points!" -- The Crucible by Arthur Miller

.

Who wants flowers when you're dead?

A couple of days ago, my friend Bruce and I were exchanging some brief emails regarding Salinger, not for any particular reason other than wondering what he might be up to in his reclusive self-imposed exile, and then the news he died the very day we were having those thoughts. As Bruce said “Are the mystical forces of the universe visiting the readers and men of letters? I'm scared.” There is a special place in our generation’s literary consciousness for the particularly honest, direct, voice of Salinger’s writing. I remember reading Catcher in my late teens thinking how can this guy know what I was thinking?

Salinger also lived in Westport CT for a while, before we settled in that town, and some think Catcher could have been written there.

Strange to be in a world without, now, Holden Caulfield, as well as Harry “Rabbit” Angstrom.

“Boy, when you're dead, they really fix you up. I hope to hell when I do die somebody has sense enough to just dump me in the river or something. Anything except sticking me in a goddam cemetery. People coming and putting a bunch of flowers on your stomach on Sunday, and all that crap. Who wants flowers when you're dead? Nobody.” --The Catcher in the Rye

Speaking of dead, Florida is known as “God’s waiting room,” and this is no more evident than in the deluge of advertisements and mailings here about estate planning, not outliving your money, etc., but my very favorite came in the mail yesterday, the “opportunity” to “win a pre-paid cremation!” Just more “crap.” RIP, Holden.


.

Volcker, Stiglitz, Hussman….

Here’s some positive news from or about people who can help point us in the right direction. First there was the big news that Paul Volcker will finally take a key role in addressing economic reform, particularly with the reinstatement of some of the key features from the Glass-Steagall Act. Joseph Stiglitz touches upon that need as well as other issues in an extract from his new book, Freefall; Free Markets and the Sinking of the Global Economy in a piece entitled “Why we have to change capitalism”

We now know the true source of recent bank bonuses: “free money” profits: According to Stiglitz, “the alacrity with which all the major investment banks decided to become ‘commercial banks’ in the fall of 2008 was alarming – they saw the gifts coming from the federal government, and evidently, they believed that their risk-taking behaviour would not be much circumscribed. They now had access to the Fed window, so they could borrow at almost a zero interest rate; they knew that they were protected by a new safety net; but they could continue their high-stakes trading unabated. This should be viewed as totally unacceptable.” Also, Stiglitz puts the bailouts in the context of the bigger picture: “the failures in our financial system are emblematic of broader failures in our economic system, and the failures of our economic system reflect deeper problems in our society. We began the bailouts without a clear sense of what kind of financial system we wanted at the end, and the result has been shaped by the same political forces that got us into the mess. And yet, there was hope that change was possible. Not only possible, but necessary.” As a consequence he argues for “a new financial system that will do what human beings need a financial system to do.”

Meanwhile, the Financial Times carried an excellent piece on Paul Volcker now that he is again front-and-center, Man in the News: Paul Volcker. For too long now Volcker inexplicably had been pushed off the center stage. Last March, as the market was in complete free fall, my tongue-in-cheek piece about “the new era of the 177K” asked, “Where is Paul Volcker to lead the way back to the 401K?”. Per the Financial Times: “this week the towering former Fed chief stood by Barack Obama’s side as the president embraced what he dubbed the “Volcker rule” banning proprietary trading – over the reservations of some of his most senior economic advisers.”
.
Then, John Hussman, the economist who runs his own mutual funds, and each Monday blogs about his views, published, today, a lengthy, carefully reasoned Blueprint for Financial Reform.
This is an extraordinarily detailed eight point plan/proposal and rather than giving the bullet points here, go to the link. It deserves careful consideration by our elected officials. Needless to say, he sides with Volcker. Hussman for Chairman of the Federal Reserve or bring back Volcker?
.
I've argued that in addition to financial reform, the main economic focus must be job creation: “a true recovery requires jobs, jobs, jobs – and how are they going to be created – by banks trading energy futures? What happened to the commitment to the infrastructure? Our roads, utilities, and public transportation are falling apart. Alternative energy seems DOA. Aren’t these the areas our financial recourses should be focused on, ones that will create jobs, in construction, technology, and finance, and can lead a true economic recovery we can pass on with pride to future generations?”

Green shoots first, then…..

.

Obama’s First Year

Yesterday’s Palm Beach Post carried an outstanding editorial, putting Obama’s first year into perspective, and I sent a letter to the editor yesterday as well. The timing of each was particularly apt as the editorial appeared the day after Brown’s victory in Massachusetts, a clear wake up call, and my letter pointed out the need to listen more to Paul Volcker if we are going to achieve some real financial reforms and, eureka, today I learned that Obama is going to finally back some of Volcker’s ideas. At long last!

The Post editorial, A clear-eyed look at Obama's first year in office makes many excellent points:
* [He faced] not just an economy on the verge of the deepest recession in 70 years but unrealistically high expectations

* [Although he has had varying degrees of success,] he has stuck to the agenda he touted as a candidate

* The GOP strategy from the start has been to oppose and deceive…Given recent poll numbers Republicans seem to be succeeding with their strategy of opposition and an appeal to ignorance or short memories. Republicans invoke Ronald Reagan. But the Reagan tax cuts — which had bipartisan support — passed Congress in July 1981, and unemployment kept rising for 18 months. It was 7.2 percent when Mr. Reagan took office and peaked at 10.8 percent, the postwar high, before coming down.

* The worst aspect of the last year has been the spillover of illegitimate criticism from the campaign. It is the criticism — most of it on the Internet and talk TV and radio — that attacks Barack Obama as less of a person, less of a patriot and thus undeserving of the presidency….Out of this rage comes the bizarre call to "take back our country" from where it supposedly has drifted in just 365 days.

* We’d like to take back the country, too, but we'd like to take it back from a media/political culture that lives only in the moment

* The problems that Mr. Obama inherited were caused by Democrats and Republicans, Wall Streeters and Main Streeters. If some Americans just are waking up to the fact that we're spending beyond our means, their previous silence makes them partners in crime. It was fanciful to think that Barack Obama could change in one year the Washington that for decades has resisted institutional change. It also is ridiculous to think that somehow he has ruined the country in one year. We are back from the brink of one disaster but far from real economic recovery.

* Mr. Obama deserves decent marks, but he can do a lot better. That's what new presidents have the rest of their term to accomplish. An impatient America must wait longer to truly judge Barack Obama.


My January 20 letter in response follows. If it appears in the newspaper, it will be in a truncated form, so here is the full-blown version…

To the Editor:

How appropriate that your excellent editorial should appear the day after Scott Brown’s victory in Massachusetts. How sadly ironic, and ominous, that Ted Kennedy’s seat should go to one who opposes the very programs his predecessor would have supported.
Your editorial sprinkles some reality dust on the whole matter, reminding us that even though we, and especially the Republicans, have deified Reagan, he too had first year shortcomings not unlike President Obama. And how quickly we forget (or the media helps us forget) that today’s economic and foreign policy problems are ones the present administration mostly inherited. And as you say, we are all complicit in the matter. Only a few years ago many Americans thought they were living the good life, using their homes as piggy banks to finance excess. We were once a nation which once relied on the production of real things, but became focused on “paper asset” appreciation.

Nonetheless, the clarion call of the Massachusetts election does underscore some serious weaknesses of the Obama administration, most notably, in my opinion, the failure to achieve real banking reform. Yes, we needed first to rescue the entire financial system, but we continue to sacrifice Main Street at the altar of Wall Street and people are angry. Who truly believes the economic crisis is solved rather than being merely postponed? This issue becomes conflated with others like healthcare, the anger simply spilling over from one to the other.

Interestingly, Obama had enlisted Paul Volcker, who helped rescue our financial system in the early 1980’s, in his campaign and once elected exiled him to the minor post of chairman of the newly formed Economic Recovery Advisory Board. He has been calling for sweeping banking reform measures such as bringing back some of the best points of the Glass-Steagall Act separating investment and commercial banking, arguing that the best way to avoid “too big to fail” is make them so they are not too big and consigning riskier financial activities to hedge funds to which society could say: "If you fail, fail. I'm not going to help you. Your stock is gone, creditors are at risk, but no one else is affected."

Instead, the Obama administration has engaged in political rhetoric on this issue, like taxing banks and criticizing bank bonuses (although indeed they are outrageous). We need a new economic morality and that is what the Obama administration has failed to address, certainly deserving as high a priority as healthcare, and has failed to heed Paul Volcker’s sage-like advice.

On a more serene note….

.

The More things Change….

…the more they stay the same. It’s as if we did a Rip Van Winkle during the past six months, awakening to the Sturm und Drang of the banker’s bonus controversy, listening to the same blather from CNBC about our stalwart bankers’ right to riches as they have paid back their TARP money, the consequences of a capitalist system at work. Six months ago I noted the absurdity of Citibank’s salary increases, their logic being they were “needed” to retain the best talent. Today’s news is record bank bonuses, even surpassing those paid out in 2007 at the top of the market: “top 38 firms on pace to award $145 billion for ’09, up 18%” per the Wall Street Journal.

We’ve become a Corporatocracy – this is not capitalism, which is supposed to reward success, not underwrite failure -- and the bonuses are just another piece of evidence that the Obama administration, while talking up change, has been conned. TARP repayments is a smoke screen, masking the myriad other ways the taxpayer is subsidizing bank profits, be it AIG back door payments, federal government guarantees, or the zero interest rate environment which gives banks access to free money (buy a 6 month CD today and see what YOU get as lender). $145 billion in bonuses while unemployment is well over 10% (if you count people who are no longer part of the labor force as they’ve given up looking for jobs)? One would think banks would grasp the PR downside of the issue, or do they live in their own amoral world?

And as brilliantly noted in a piece in Naked Capitalism, Obama’s “Get Tough on Banks” Again Tries to Play the Public for Fools, Obama’s proposed tax on banks is merely a slap on the wrist, nice political fodder to appease the masses, but it clearly falls short of the reforms that are needed in the industry. Naked Capitalism contrasts Obama’s weak stance to the soaring rhetoric of FDR when he took office: “….the rulers of the exchange of mankind’s goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.”

However, all of this pales in importance to the tragedy in Haiti. Here is the site of the American Institute of Philanthropy, a nonprofit charity watchdog and information service, giving their highest rated charities that are active in Haiti.
.

Aegean Adventure Redux

I left the Aegean Adventure post in the middle of our trip, with a promise to cover our remaining days in the Greek Islands, Dubrovnik, and, finally, Athens. Today, southern Florida is in its 10th day of temperatures near freezing at night, a record, and, so, what better time to recall the warmth of the Aegean Sea?

The Greek Islands in particular were stunning in their beauty, the timelessness of its towns meeting the sea, the ubiquity of its churches juxtaposed to medieval walls, evidence of conflicts of previous civilizations. In Croatia, the walled city of Dubrovnik shows not only the mark of ancient wars, but the recent flack scars of the Serbian siege of 1991 as well. And Athens, understandably mobbed with tourists such as us, majestically marks the foundation of Greek civilization. Searching for a leitmotif in this experience, I cannot help think of the scores of generations that have come and gone on these ancient lands, the lives, and the births and deaths of an endless parade of now anonymous individuals as well as the notables marked by stone monuments.

I mentioned that while we were touring, I was reading John Updike’s Self Consciousness, the closest he ever came to writing an autobiography. There are so many passages that I underscored in the book, ones I will want to return to, I ended up noting as much as I failed to note. But some of his writings on religion and mortality as well as the craft of writing, struck a particularly sensitive cord with me while visiting these places, the evidence of civilizations we saw, so I am going to defer to Updike and allow his words to resonate at the end of this post, while some of my photographs offer their own viewpoint.

One of the Seven Wonders of the Ancient World, the Colossus of Rhodes, once bestrode the harbor of Rhodes. We visited the old town that is contained within its medieval walls.

Rhodes Palace Archway

Rhodes Street of the Knights

Delos, a small rocky island, but to the Greeks a sacred place as Apollo and Artermis were said to be born there.

Delos Panorama

Mykonos is one of those picture post card islands whose Cycladic architecture and narrow streets makes every turn a photo-op. A young woman even wanted to show off how she filled out her bathing suit in a doorway, and was eager to pose.

Mykonos Harbor

Mykonos Church of the Panagia

Mykonos Doorway

Santorini is another such island, built on the ring of a volcanic crater, the main town of Oia rising dramatically from the sea

Santorini on the Edge of the Caldera

Santorini Blue Dome at Oia

Olympia, the site of the ancient Greek Games, is a sanctuary associated with the games and the worship of the Greek Gods. To stand on the remaining site of the stadium where the events were held, is awe-inspiring.

Olympia Temple of Hera

Corfu is one of the largest Ionian Islands and we spent the day in the old town

Corfu Old Town

We loved Dubrovnik, Croatia. Our wine steward aboard the ship was Croatian so we had already felt a deep affection for the long suffering of the Croatian people and their city, which has been a focal point of conflict and conquering forces.

Dubrovnik


In Crete we bused to the Lassithi Plateau and toured its ancient windmills, returning to the city of Aghios Nikolaos on the islands eastern side.

Crete Ancient Windmills

Walking up the steps to the Acropolis with thousands of other tourists, the city of Athens below, made me think of the march of civilization and the inconsequentiality of our own steps in this procession.

Athens Parthenon

.

.

.

.

.

.

.

.

Athens and Temple of Thission

From John Updike’s Self Consciousness; A Memoir (Knopf; 1989)

On Religion and Mortality…

“…The idea that we sleep for centuries and centuries without a flicker of dream, while our bodies rot and turn to dust and the very stone marking our graves crumbles to nothing, is virtually as terrifying as annihilation. Every attempt to be specific about the afterlife, to conceive of it in even the most general detail, appalls us.”

“Not only are selves conditional but they die. Each day, we wake slightly altered, and the person we were yesterday is dead. So why, one could say, be afraid of death, when death comes all the time? It is even possible to dislike our old selves, those disposable ancestors of ours. For instance, my high-school self – skinny, scabby, giggly, gabby, frantic to be noticed, tormented enough to be a tormentor, relentlessly pushing his cartoons and posters and noisy jokes and pseudo-sophisticated poems upon the helpless high school – strikes me now as considerably obnoxious, though I owe him a lot: without his frantic ambition and insecurity I would not be sitting on (as my present home was named by others) Haven Hill.”

“For many men, work is the effective religion, a ritual occupation and inflexible orientation which permits them to imagine that the problem of their personal death has been solved. Unamuno: ‘Work is the only practical consolation for having been born.’ My own chosen career – its dispersal and multiplication of the self through publication, its daily excretion of yet more words, the eventual reifying of those words into books – certainly is a practical consolation, a kind of bicycle which, if I were ever to stop pedaling, would dump me flat on my side. Religion enables us to ignore nothingness and get on with the jobs of life.”

“Karl Barth…responding in an interview late in his life to the question about the afterlife, said he imagined it as somehow this life in review, viewed in a new light. I had not been as comforted as I wanted to be. For is it not the singularity of life that terrifies us? Is not the decisive difference between comedy and tragedy that tragedy denies us another chance? Shakespeare over and over demonstrates life’s singularity – the irrevocability of our decisions, hasty and even mad though they be. How solemn and huge and deeply pathetic our life does loom in its once-and doneness, how inexorably linear, even though our rotating, revolving planet offers us the cycles of the day and of the year to suggest that existence is intrinsically cyclical, a playful spin, and that there will always be, tomorrow morning or the next, another chance.”

On writing…

“My success was based, I felt, on a certain calculated modesty, on my cultivated fondness for exploring corners – the space beneath the Shillington dining table, where the nap of the rug was still thick; the back stairs, where the vacuum cleaner and rubber galoshes lived; the cave the wicker armchairs made when turned upside down against the rain on the porch. I had left heavily trafficked literary turfs to others and stayed in my corner of New England to give its domestic news.”

“Celebrity, even the modest sort that comes to writers, is an unhelpful exercise in self-consciousness. Celebrity is a mask that eats into the face. As soon as one is aware of being ‘somebody’ to be watched and listened to with extra interest, input ceases, and the performer goes blind and deaf in his overanimation. One can either see or be seen. Most of the best fiction is written out of early impressions, taken in before the writer became conscious of himself as a writer. “

“I envision my paternal grandfather as having been, like me, bookish and keen to stay out of harm’s way; we aspired to the clerisy, and the price that we pay, we Americans who shyly wish to live by our eyes and wits, at our desks, away from the frightening tussle of human strength and appetite and intimidation and persuasiveness, is marginality: we live chancily, on society’s crumbs in a sense, as an exchange for our exemption from the broad brawl of, to give it a name, salesmanship.”

“So writing is my sole remaining vice. It is an addiction, an illusory release, a presumptuous taming of reality, a way of expressing lightly the unbearable. That we age and leave behind this litter of dead, unrecoverable selves is both unbearable and the commonest thing in the world – it happens to everybody. In the morning light one can write breezily, without the slight acceleration of one’s pulse, about what one cannot contemplate in the dark without turning in panic to God. In the dark one truly feels that immense sliding, that turning of the vast earth into darkness and eternal cold, taking with it all the furniture and scenery, and the bright distractions and warm touches, of our lives. Even the barest earthly facts are unbearably heavy, weighted as they are with our personal death. Writing, in making the world light – in codifying, distorting, prettifying, verbalizing it – approaches blasphemy.”

.