Rethinking The Media & Publishing Industry
As the way we consume media changes, businesses models have to change too
If you started a media company in the 20th century, your business model likely had two parts. The first was to produce winning content, usually by choosing the best talent to work with. The second was to manage the business of media, in order to help your talent thrive. In exchange for this work, you owned all or most of the revenue generated by their talent, and all was well with the world. When your movie studio forked out cash for acting talent and managed the logistics of making and promoting the movie, you earned a return on your investment through ticket and DVD sales. When your record label paid artists enormous fees and coordinated their work, you earned a return on your investment through album sales. When your publishing company paid authors large advances and spent the money necessary to publish and market their books, you earned a return on your investment through book sales.
This model worked — and continues to work — as long as the media you created was the major revenue generator. But the way the public perceives and consumes media is changing, and it’s leading to major changes in the industry.
When Media Isn’t the Money Maker
In 1984, American writer Stewart Brand coined the phrase “information wants to be free”. Since then, we’ve seen his prediction come to life. And, not only does information want to be free, but other forms of content want to be free as well. For various artists — such as musicians, authors, and directors — we’re seeing a shift towards a world where high quality media is given away inexpensively or for free in order to share ideas, build trust, and grow a fanbase.
Once this trust is built, creatives are finding other ways to make money from their content. We’re seeing more and more authors on speaking tours, musicians with Patreon accounts, and musicians focusing on touring as their main revenue stream. This is fine. In fact, it’s good for creatives. But it’s a problem for media companies. When the dollars aren’t coming from the media they produce, these companies are struggling to get their piece of the pie.
This is true in every industry, and media companies are trying whatever they can to expand their scope beyond the direct media revenue. For example, EMI Records recently signed a deal with Robbie Williams to expand beyond his album sales into merchandise, publishing, touring revenue and sponsorship. But, among all media companies, this problem is most pronounced in publishing. Why? Because books are an inexpensive form of media (difficult to monetize on their own) that build a large amount of trust (and are therefore easy to monetize in other ways).
Authors are doing just fine. Readers of their books become fans, and they are able to monetize through speaking, consulting, starting businesses, running communities, or connecting with their fans in other creative ways. To make things worse for publishers, those authors who are likely to sell many copies of the book, they are able to go around publishers and sell directly on Amazon for 5x the royalties. The publishing industry still makes money — mostly on its backlist — but with authors looking to monetize in other ways and self-publishing taking a portion of authors, the economics are becoming more and more difficult for publishers to make a return on book sales alone.
Publishing’s Hidden Opportunity
The opportunities in publishing will come when publishers can capture a piece of the full value they create by connecting authors and readers, not just the book sale portion of the interaction. The same way that EMI is looking to earn revenue from their musicians going on tour, publishers need to be able to monetize more than just book sales. Not only with this lead to more successful publishers, but will also align their incentives with authors. Rather than pushing book sale revenue as a metric on authors with numerous other objectives (impact, thought leadership, speaking revenue, business growth, etc), publishers can capture more revenue and make their authors happier — and more likely to stick around — by aligning their incentives.
The challenge is how to do this. Indie publishers are popping up that take a portion of speaking revenue. Others have tried more creative models, owning the online platform for the book. But the truth is, because the ways to benefit from a book are so vast for the author, publishers will always be a step behind. At Scribe Writing, we’ve decided to do this in the simplest and cleanest way possible: working on a flat-fee service model. Although this doesn’t capture all of the upside of the value we create, it allows authors to decide on their own whether they can generate a return on investment, and decide whether or not to pay us based on their own calculations of the total value of the book.
Although many authors initially see flat-fee economics as unlikely to align incentives, it works surprisingly well. Rather than optimizing for one metric — book sales — which doesn’t align with our authors’ ultimate goals, we are able to focus on working with authors who know that they have a return on investment, and helping them to reach their goals. This requires a reframing of the traditional media business model. Rather than judging authors and books based on the potential for a mega-bestseller, our screening process revolves around whether books can serve readers and whether authors can benefit from their books.
More importantly, as a service business, we hold ourselves to the standard of the best service businesses, not traditional publishing. Whereas publishers — seen as gatekeepers — could get away with sub-par service, a business like ours needs to deliver at the highest standard to earn our authors’ business. This has led to major changes in how we serve our authors. Because we work with busy entrepreneurs and executives with lots of ideas but not much time, we cater to the needs of this audience.
Our service is based on allowing them to create an incredible book without the usual time constraints. First, they spend a month positioning and outlining their ideas through a series of phone calls with one of our book developers. Then a Scribe on our team interviews them based on the content, transcribes their words and stories, and translates those ideas into a first draft of the book. They then work on revisions, have their cover designed by a world class artist, and work with our marketing team to release the book. Throughout the process, the details are managed by a Publisher on our team who oversees the entire project.
In other words, to meet the needs of this type of author, we surround them with a team to handle every part of the process. This allows them to focus solely on their ideas, and allows our average author to publish their book in only 40-50 hours of their time. This collaborative approach to creating a book makes it easier for authors and professionals to create incredible books around their busy schedules, and enables them to share their wisdom with the world.
We are just one example, providing a set of services that are best for one type of author, but this author-first model is a symptom of an underlying change: power is moving towards creatives, and media companies are going to need to adapt to serve their needs, or be left behind.
Zach Obront is the co-founder of Scribe Media, where he helps busy entrepreneurs and professionals write and publish their books.