Thursday, July 08, 2010

Economics for Publishing 101

I mislead with this headline. I'm not providing such a lesson, but rather require it. Please advise on good sources.

The reality is, everyone has their own opinion on how publishing can move forward in a way that is financially secure. 90% of it is probably bunk, or at least iffy conjecture. I certainly don't have an answer but find a certain logic, and/or perhaps comfort, in simplifying.

This article by John Standerfer in the Huffington Post (a high school classmate of mine!) raises the issue that corporations have become so efficient in modern-day America that they don't need as many employees. As we all wait to come out of the Great Recession, we have to stop staring at employment numbers and hoping the unemployment drops magically. He brings up this uncomfortable example:
According to their most recent annual reports, Amazon generated $24.5 billion in sales with 24,300 employees while Barnes & Noble had $5.8 billion in sales with 40,000 employees. Amazon is generating over $1 mm in sales per employee while Barnes & Noble is generating less than $150,000. Put simply, for every million dollars in revenue Amazon takes from Barnes & Noble, Amazon hires one person and Barnes & Noble lays off seven.
Yikes. No, I'm not entirely sure what this means, but it can't be good.

There are quite a few comments below this article debating its validity, as ever in our modern internet-based media, and some good points are raised. Manufacturing has shrunk so dramatically in this country, but it didn't just vaporize: it moved to developing countries, where corporations could find much cheaper labor and more lax regulation. This is a bit beyond the example provided here however, regarding Amazon and B&N.

(I kind of love this point by "worldsfairdesign" (whose avatar may be Herbert Marcuse?), which is just so cranky and, as someone happily not ensconced in corporate America, seems so true:
Bottom-line is that the vast majority of the American middle class hasn't produced much of anything of value for about 30 or 40 years. Don't tell me consulting for a marketing firm that handles PR for an entertainment company is valuable. It doesn't warrant making five figures any more than being a CEO warrants making six.
Apologies for the tangent.)

So what does this mean for publishing? I don't really know, but I do know this comes back to the point many have made about the value of humans in the whole publishing and bookselling world. There is something people appreciate about the anonymity of Amazon, and no one can question the convenience, and the endless incentives (free shipping, anyone?!). But it comes at a price. It isn't entirely increased efficiency - though Amazon has mastered that, as covered by Ted Striphas in his book, The Late Age of Print - but also the wonders of the internet, which cuts down the need for store space - and store staff. Yes people like the physical space of a bookstore, so often replicated in movies and tv shows, but are they willing to pay for it?

I know I've gone on and on about labor before, but it does worry me. And something not addressed here is the massive amount of accumulated wealth in this country - the rich have become much, much richer - and yes, I'm looking at you, Mr. Jeff "$4.3 billion worth" Bezos. It's time to DISTRIBUTE that WEALTH, billionaires! It's hard to look at that amount of wealth alongside struggling independent bookstores and important independent presses that are getting by on nothing, with employees making pennies (trust me, I speak from experience) and having to cut corners while fatcats question their bottom lines, telling them they should dry up and die if they can't find a market. That's not even to mention public libraries facing horrible cuts, to employees, to hours, to branches. I know this is simplistic but on some level, so is the problem: $4.3 billion here and bookstore or library closing there (or here or there), it doesn't take a math genius to find imbalance.

Well now I'm angry. At least I have BookPeople ("A Community Bound by Books" - great slogan) to look forward to for the coming weekend in Austin, TX. I'm also happy to hear of any used bookstore recommendations there.

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