ChasNote

From Ken Auletta’s Publish or Perish essay in the New Yorker:

“Traditionally, publishers have sold books to stores, with the wholesale price for hardcovers set at fifty per cent of the cover price. Authors are paid royalties at a rate of about fifteen per cent of the cover price. A simplified version of a publisher’s costs might run as follows. On a new, twenty-six-dollar hardcover, the publisher typically receives thirteen dollars. Authors are paid royalties at a rate of about fifteen per cent of the cover price; this accounts for $3.90. Perhaps $1.80 goes to the costs of paper, printing, and binding, a dollar to marketing, and $1.70 to distribution. The remaining $4.60 must pay for rent, editors, a sales force, and any write-offs of unearned author advances. Bookstores return about thirty-five per cent of the hardcovers they buy, and publishers write off the cost of producing those books.”

So when the book is an ebook, publishers aren’t paying $1.80 for paper or $1.70 for physical distribution, or the $1.80 plus $1.70 on the thirty-five percent of books they produce and distribute and later sell for pennies on the remainders market. Say you sell 65 physical books, that’s $350 in costs (since you need to print and distribute 100 of them) — $5.38 per book that you don’t need to spend if book buyers read it on a Kindle or iPad.

Yet David Young, chairman and CEO of Hachette Book Group, seems to speak for all the big publishers (per Auletta’s article) when he says:

“The big concern — and it’s a massive concern — is the $9.99 pricing point. If it’s allowed to take hold in the consumer’s mind that a book is worth ten bucks, to my mind it’s game over for this business.”

What?! The current business model earns book publishers a buck or two on an item that retails for $26 and sells for about $13 (since big retailers often sell best-sellers at half price). If the Kindle version saves publishers more than $5 per book, and Amazon wants to sell them for $3 less than the physical edition of the book ($10 instead of $13), why are publishers up in arms? Doesn’t it seem like publishers ought to make what they make now, plus some part of that extra $2 per book?

From the book review of The Publisher, Alan Brinkley’s new biography of Henry Luce, the media entrepreneur who founded Time (in 1923), Fortune, Life and Sports Illustrated.

“Luce and Hadden shared a contempt for what is now called the mainstream media, both the sensational tabloids and the serious dailies, which they regarded as dull and bloated. Brimming with precocious self-confidence, they conceived a weekly digest of news and analysis culled from other publications. The journal that was initially to be called Facts (but ­morphed into Time before its debut in 1923) promised to scour close to 90 periodicals and amalgamate news from every sphere of life. Its declared mission was to serve ‘the illiterate upper classes, the busy businessman, the tired debutante, to prepare them at least once a week for a table ­conversation….’ The new magazine had the qualities we associate now with blogs. It was concise and informal, with plenty of political topspin, rendered in a prose that inspired much satire.”

My reading selection for this holiday break: Michael Wolff’s The Man Who Owns the News — how Rupert Murdoch built his father’s Australian newspaper company into today’s most important global media empire over the past 35 years. When he moved to New York in 1974, it was a time when “there are no real national news outlets. The New York Times is a metropolitan paper. The Wall Street Journal is a specialty business publication. USA Today does not exist. CNN does not exist. Cable television and cable news do not exist.”

Cory Doctorow is out with his new book too, Little Brother. What a week for readers who want to take their favorite online authors (like these) into the battery-free zone!

Heather Armstrong, author of Dooce, has published her first book, a collection of essays (two contributed by Heather) called Things I Learned About My Dad. Congrats, Heather. I look forward to digging in to what, I’m guessing, will be the first of many books of yours I will read in the years to come.

The collection includes essays from some of my other favorites (and, full disclosure, FM partners) as well: James Griffioen from Sweet Juniper, Doug French from Laid-Off Dad, Alice Bradley from Finslippy and Maggie Mason from Mighty Goods.

Marketing has two functions, when you boil it down. One, to remind you to buy stuff you need (voice-over-IP phone service) or could imagine needing (Ginsu knives). This is direct-response marketing, and it often features a limited-time special price to lend urgency to that reminder.

The other purpose is to convince you to buy something you don’t really need but your desire for it somehow gets the better of you. This is brand marketing.

When it works — when a company creates a compelling brand associated with its wares — you begin to want stuff because to buy, wear, drink, drive, eat or smoke the variety that carries a particular logo makes you feel more complete. Taller, smarter, more compassionate, sexier and the rest.

Rob Walker, who writes the Consumed column for NY Times Magazine and the Murketing blog, calls this the Desire Code. His new book “Buying In” explores how and why it works — and it works, apparently, on just about all of us. “The fundamental tension of modern life,” he says on page 22, is this: “We all want to feel like individuals. [Yet simultaneously] We all want to feel like a part of something bigger than ourselves.” Ramones t-shirts and Viking stoves, it turns out, help us bridge that divide. And it’s often the symbols (brands, logos and ideas) rather than the products themselves that perform the magic:

“Sales of skateboarding ‘hard goods’ — helmets and wheels and actual skate decks — totaled around $809 million. But sales for T-shirts and shoes and other ’soft goods’ brought in much more, around $4.4 billion…. It has become possible to participate in the idea of skateboarding without actually skateboarding.”

The book publishes in early summer, but chapters are available online at Random House.

Burned out on Oprah’s Book Club? Us too. So we’ve started our own book group here at FM. Our selection for Q1 2007: Joseph Jaffe’s Join The Conversation.

From Page 29:

“Whereas [old marketing] puts the brand on a pedestal and expects consumer to worship it, covet it, aspire to it, and ultimately take a subservient position to it, [new marketing] asserts the opposite: that the brand must fit into consumers’ lives.”

While you’re waiting for you copy to arrive, you should be reading Jaffe’s site, Jaffe Juice.

Vance Packard’s 1957 classic critique of advertising, “The Hidden Persuaders,” is being republished with an introduction by Mark Crispin Miller — just time for election season. From the NY Times Book Review:

“What’s surprising is the degree to which we’ve all become sophisticates, engaging in our own Packard-like critiques of consumer culture without changing our habits. We know we buy irrationally; we just don’t care. We imagine that the ‘manipulators’ at J. Walter Thompson or BBDO play only on the fears and hopes of desperate consumers who aren’t as ‘conscious’ as we are (in which case it’s hard not to admire the ingenuity of the advertisers), while we ourselves are smart enough to decide when to give in. On the last page of ‘The Hidden Persuaders,’ Packard had to acknowledge the paradox: ‘When irrational acts are committed knowingly they become a sort of delicious luxury.’ We seem to enjoy both knowing that ads are hustling us and choosing to be hustled.”

From Media Week.

“Like much else in the digital world, Google stands at the center of this shift, Horan said. The ability to use search engines to find information means a more meritocratic media world, where a smaller advertiser or publisher can compete with larger companies on the basis of relevance. A car shopper, for instance, uses search to find information and considers a variety of sources rather than turn to a single trusted brand, he said. Intent-driven media also means a blurrier distinction among content, commerce and community, he said. As an example, Horan pointed to Nike+, the running system and social network that blend product, branding and service.”

I’m wondering if Horan read Battelle’s book.

In Malcolm Gladwell’s The Tipping Point, it’s small groups of hipsters in the East Village that start the trends that become national phenomena. In the book business, it’s a humbler, less fashionable set — leaders of small reading groups — that launch best-sellers (see NY Times).

“Increasingly, authors and publishers are tipping their hats to the power of 8 or 10 or 12 women (and usually they are women) sitting around a dining room table, dissecting their particular book of the month, then spreading the word to their friends. Along with ‘The Kite Runner,’ the successes of ‘The Memory Keeper’s Daughter,’ ‘Water for Elephants,’ ‘Eat, Pray, Love’ and ‘Kabul Beauty School’ have been credited to the early and continuing support of reading groups.”

It makes sense then that other large brands — such as Johnson & Johnson are investing in marketing to small groups of evangelists.