[DMcCunney]

Originally Posted by Steve Jordan

Thanks for the reference. It's a shame that the industry lost a lucrative way to cheat on their taxes, but that's not a cause of publishing's problems, just one in a host of symptoms.

(Edit: An excellent description of the Thor Power Tools Decision is here.)

Yes, I've read that, and it's a good summary. But I never claimed that decision was responsible for Publishing's woes. (And I know folks who think the publishing industry badly handled its legal defense in that case. That would not surprise me, and publishing has a bigger than normal helping of institutional stupidity.)

The publishing industry has put themselves in this position, thanks to chasing the fastest buck, to the detriment of quality product or consumer benefit. And now, like so many other industries, when it comes time to make a change, they have realized that they don't want to spare the resources needed to invest in new tech because it feels too good watching it fill up their bank accounts.

It's a little more complicated than that, and it isn't clear what "new tech" you think they aren't investing in.

The American auto industry, when faced with the need to change to more economical cars, simply decided to force their agenda on consumers, and to Hell with change. Of course, it was only a quick fix, designed to get the present stockholders into a comfortable retirement before the bottom fell out. The auto industry now sees how badly that tack worked, as foreign auto makers took advantage of their malaise to move in and capture the markets, and the once-mightly industry is now struggling to remain profitable.

The biggest problem facing the American auto industry these days is the cost structure. Thanks to contracts originally negotiated in the salad days when GM's problem was to keep market share below 35% to avoid anti-trust issues, American auto manufacturers are stuck with labor costs which are a multiple of those at foreign competitors. Delphi Automotive, a former GM unit, went Chapter 11 not that long back, and there were rumors Ford and GM might do likewise. Delphi sells parts to automakers. Because of the sort of contracts I mentioned, that have workers making $60/hour in pay and benefits, but must compete with foreign suppliers whose average labor costs were more like $10/hour.

And the Big Three are in a situation where there are now more retired workers expecting to collect pension and health care benefits than currently employed workers paying into the funds that provide it. Unfunded pension liabilities are an albatross around the Big Three's neck, and may yet drag them down.

Publishing's retail and distribution channels are changing. In fact, like the auto industry, most of it is being driven by economy, and the new guys are providing it, while the old publishers are trying to keep the consumers' mind off of it with expensive books and big names... literary Hummers. If small publishers and independents similarly move into the gaps left by the big publishers, there won't be much left for the big pubs to do but watch their market share decline even faster. If they do not reverse their prospects, they will become boutique publishers, having nothing left to sell but the Hummers.

The small publishers won't have an easy time of moving in. They have two major hurdles, marketing and distribution. Their first problem is how they make the buyer aware they exist and offer books the buyer might want. The second problem is how they get those books into the buyer's hands. That second problem got a lot bigger last December, when Publisher's Group West filed for bankruptcy, as a result of problems in their parent company, Advanced Marketing Services. PGW distributed a lot of independent presses, who had to scramble to find new homes. Some folded, because PGW went Chapter 11 leaving them unpaid, and small publishers typically live hand-to-mouth and can't handle an interruption in their cash flow. Some which have found other homes are changing radically, such as Carroll and Graf, who will apparently no longer publish fiction.

(See http://www.sfgate.com/cgi-bin/articl...NG9DNQ8TM1.DTL) for one of many stories on the matter.)

And some imprints, while technically independant, rely on major publishers. Baen Books, for example, is manufactured and distributed by Simon and Schuster.

And selling only Hummers isn't necessarily viable. You may recall Lyle Stuart, Inc., who specialized in exposes, "unauthorized biographies" and the like. They published a dozen titles a year, promoted the hell out of them, and hoped a few would become best sellers and cover the losses on the rest. They got away with it for years, but eventually hit a patch where they didn't have any best sellers and had to fold.
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Dennis