WarGames in the Book Industry

I really enjoy the Teleread website here. It is one of my must-read sites each day because it is chockful of news about e-books, e-readers, publishing and copyright.

About a week ago here, Teleread published an open letter to the publishing industry from a prolific reader named Joanna.

Joanna describes herself as a person who reads 100+ books a year. She is fed up with the Big Six's efforts to control the e-book industry and says:

I am sick of the price fixing. I am sick of the head-in-sand burying. I am sick of publishers or agents or authors ... who are mucking up what should be a simple money-for-product transaction ... Enough! I am no longer dialoguing with you on this. My decision? I figure it will take you maybe two to three years to come to your senses, and while I am waiting, I am opting out of this whole thing.

Play whatever games you want to—I am ignoring it all. I will not be the guinea pig for any more of your ridiculous experiments.

She goes on to explain that, until the Big Six come to their senses, she will limit her e-book reading to those she can get for free or for under $10.

If you (sic) book is too expensive or too geo-restricted or too format-restricted or too darned complicated for one of the above scenarios to both apply ... it will languish on my wish list forever. I am prepared to take that loss and not read your book.

Of the fifteen comments posted in response to Joanna's "opt out" letter, all but two are in agreement. One of the commenters referred Joanna to the latest edition of the New Yorker in which James Surowiecki has a financial op/ed piece here on the decline of Blockbuster.

I read the Surowiecki article with interest because of the parallels to publishing. I hope Mr. Surowiecki will forgive me, but I'm going to reprint a couple of paragraphs from his op/ed and substitute the publishing equivalents in brackets for "Blockbuster" or "movie rental" or "Netflix":

The problem--in [the Big Six's] case, at least—-was that the very features that people thought were strengths turned out to be weaknesses. [The Big Six's] huge investment, both literally and psychologically, in traditional [print books] made it slow to recognize the Web’s importance: in 2002, it was still calling the Net a “niche.”

But, once [Amazon] came along, it became clear that you could have tremendous variety ... and, thanks to the [Amazon's] recommendation engine, actually get some serviceable advice.

Why didn’t [the Big Six] evolve more quickly? In part, it was because of what you could call the “internal constituency” problem: the company was full of people who had been there when bricks-and-mortar stores were hugely profitable, and who couldn’t believe that those days were gone for good ... The familiar sunk-cost fallacy made things worse. Myriad studies have shown that, once decision-makers invest in a project, they’re likely to keep doing so, because of the money already at stake. Rather than dramatically shrinking [its infrastructure], [the Big Six] just kept throwing good money after bad.

Surowiecki is exactly right. I did a post on the publishing industry's thinking errors here last year as part of a series on "The (Publishing) House is Burning."

When I was a kid in New York, I was fascinated by the street vendors--particularly the ones who played the shell game with passers-by. My grandfather taught me that no matter how slick the patter or how fast the hands moved, it was a sucker's game. The ONLY way to win was not to play. Joanna has figured that out.

If you need a more visual explanation, try this scene from one of my favorite movies released way back in 1983:



By the way, a headline in yesterday's Publishers Marketplace read "At Simon & Schuster, Profits Rise Even As Sales Slide."