Will's Favorite Episode of 2021: Andrew Savikas on Hyper-competition in the Book Industry

Richard Kramer: Welcome to Bubble Trouble, conversations between the economist and author, Will Page, and myself, independent analyst Richard Kramer, where we lay out some inconvenient truths about how financial markets really work.

Today, we're in conversation with our four special guests, discussing the topic of hyper competition in the written and spoken word. More in a moment.

Welcome to Bubble Trouble. I want to welcome along my co-host, Will Page. Hey, Will.

 Great 

Will Page: to be here talking about my favorite Scottish word, 

Richard Kramer: books.

 Books. And welcome our special guest today, Andrew Savikas.

Andrew Savikas: Thanks, Richard, I'm thrilled to be here. I'm currently the chief strategy officer at Get Abstract, the world's largest provider of book summaries. And before that, I had executive positions at Safari Books Online and O'Reilly Media, and I actually wrote a book for O'Reilly Media way back 2004, about, of all things, writing word macros. So, I've been, uh-

 [laughs]

 ... I know how the sausage is made, and I'm looking forward to talking to you guys about it.

Will Page: So you, you wrote your book just before iTunes came to Europe, so that's how we're gonna date you, my friend.

We're here to talk about hyper competition, which we've tried to summarize is that point where quantity increases and quality decreases. But if we look back on previous episodes, Andrew, it's interesting that we've talked about advertising, which has to make a connection within four seconds. We've talked about music, which has to make a connection in under four minutes. Then we talked about podcast, which has to make a connection in under 40 minutes. But, we're here to talk about that favorite Scottish word, books, again. And, you know, it's interesting for me that it takes four weeks to finish a book. Perhaps for Richard Kramer, it takes four days to finish a book. It's taking up a lot of time. It's sort of this battle for attention, for the scarce attention. We're talking about the topic which takes up a lot of our time, and I want to understand over the course of, like, 25 minutes, how does that industry survive.

But firstly, let's just take a trip down memory lane. The book industry hasn't changed much in the past 20 or 30, but what puzzles me is, so many opportunities to change things have passed it by. So could you just give us a kind of greatest hits of successes or failures of the book industry from your perspective over the past, let's say, till 

Andrew Savikas: 2004?

 Sure, that's a great question. And, it's true that not a lot seems to have changed about the book industry, and that's in part because not a lot changes about books, from the reader's perspective. Now, technology has been around for a thousand years or more now, right? And, a lot of the innovation happened quite a bit ago. So, my favorite example is that it took the hyphen several hundred years to make it from, you know, Germany to the UK. Page numbering, indexing, tables of content, word spacing, all these things were, in their time, innovation and technology innovation.

My... One of my favorite quotes comes from, uh, Allan Kay, who said, "Technology is anything that was invented after you were born. Uh, everything else is just stuff." And, all these things did happen for a very long time, and the form factor, as it were, you know, was pretty much in place.

Of all of the innovation that has happened, it has actually been kind of behind the scenes. Uh, a lot of things that have to do with distribution, and sales, and marketing. I mean things, again, stuff we think is just stuff, like paperback books, were a significant innovation that brought a wider range of, of reading options to a much wider, mass-affluent audience following the post-war generation.

And something else, I, I would say the most interesting innovation in publishing in last, since 2004, is the opportunity to take things that used to have to be books and make them much more usable. There's a whole category of books that are essentially printouts of databases. If you think about a dictionary or a telephone book, even an atlas.

 Wow.

 It's surprisingly more effective and more efficient to have Google Maps, or just plain Google, to have the database itself, rather than the printout in Codex form.

 Mm-hmm [affirmative]. Yeah, 

Richard Kramer: one of the things that springs to mind is when I first came to London 30 years ago, living without a London A to Z book, which came in every size from three-inches diagonal to 15 or 16-inches diagonal. I mean, living without the A to Z in London was impossible. And now, I guess they're just museum relics.

Now, since this podcast is constantly thinking about markets and how they affect the way we think and the language they use, can you talk us through what I know has become an incredibly concentrated ownership structure in the book industry, with these sort of giant conglomerates. Was this really driven by industrial logic, that really it was only one of these giant publishers that could take a popular title and translate it into the 86 languages that potentially were markets for it? Or was it driven by the kind of financial imperative, or logic, if you want to call it that, that we're constantly debunking on this podcast where the beneficiaries are more the private equity funds or shareholders, less the companies themselves or the end, end consumers of the product?

Andrew Savikas: It's an interesting evolution of the industry that, you know, people who live through it have fascinating stories to tell about how it went from this very cordial, old school, old boys club of famous authors coming through and having three-Martini lunches, and this great, fun time to be in places like New York and London.

And then following on, the growth of conglomeration across many industries, um, there was this sense of, "Well, this could be a, another industry to, to bring into that model." Um, but, unfortunately, the realities of publishing are, in, in, in many ways, the people who do it don't, don't do it for the money. It's an industry that, that is treated a lot more like a vocation, and, and in some ways, um, something that people do because they're passionate about it, rather than about money. And that, in some ways that, that can de- depress some of the, the economic, uh, realities of the industry.

And one of my favorite stories is that when General Electric acquired RCA in 1986, at the time, at least, it was a very well-run company. It immediately shut down two underperforming divisions that did not meet its standards of profitability. The first was a poultry grower, and the second was Random House. Um, [laughs]-

Richard Kramer: [laughs] Yes. Yeah, I was gonna say that, Will, that sounds a heck of a lot like the music industry, because another podcast about hyper competition, we've wondered what prompts the... is it 65,000 tracks that are uploaded to Spotify every week from people's bedrooms?

 Every day. Every day. Every day.

 Every day, and we obviously all don't have the wherewithal to write a book every day, but it sounds like you're, you're dealing with a huge, uh, uh, explosion of supply and very little ways to monetize that in terms of profitable demand.

Andrew Savikas: That's exactly right. And so, there are two really important categories of books to think about. One is the front list, and this is the books that a publishing company, in broad strokes, the new books they publish in a given year, for example.

 Mm-hmm [affirmative].

 The other category is the back list, which is everything they have already published in the past. And, a, a huge amount of the profits in publishing come from the back list, because those costs have already been spent, and so it's besides the, the marginal cost of printing a new book, um, it's a significant source of profit the publishing industry.

Uh, the front list is become quite a battleground. As you've pointed out, the number of titles being published has exploded, and so, the number of copies a publisher can expect to sell of a given book has gone down.

 Wow.

 So you have to, in this frantic sort of treadmill of publishing more title to earn the same amount of revenue, which continues to feed the over-supply. Um, and at the same time, the back list which used to be maybe a few hundred-thousand titles is now pushing 20 million, because nothing ever has to go out of print anymore. And those two things together have dramatically altered the economics of the industry and driven a lot of the consolidation that you're seeing.

 You're reminding me of one of my favorite childhood books, Alice in Wonderland and the famous Red Queen race where it said, "You have to run as fast as you possibly can just in order to stand still."

 That's exactly right. That's the situation that we're in, where it's a very logical response to say, "Well, if my average revenue per title is going down, I can solve that by printing more or publishing more titles." Um, but again, it just feeds into this treadmill.

Richard Kramer: So, how come no one of these financially-minded publishers has sa-, taken the approach that, "Look. You know what? Let's just diminish the importance of this front list. Let's not publish so many titles, and let's just milk that back catalog"? Because, we certainly see that, and Will can speak to this, in the music industry, where the rights of, of artists that are now dead and buried are transacting from hand to hand for hundreds of millions.

 That's right, 

Will Page: Richard. Just to jump in quickly, I think the Universal IPO prospectus said that 30% of their business was front line and 70% was catalog. The money's made at the back, not at the front of the 

Andrew Savikas: release 

Richard Kramer: schedule.

 So hasn't any clever private equity boffin said, " You know what? We'll buy one of these publishers, stop publishing books [laughs]-"

 [laughs]

 "... and, and just milk the, the long-dead authors that we can, that we have the rights 

Andrew Savikas: for"?

 Yeah, I mean, you do see some of that. You know, the challenge there is, you have something of the, the kind of Lindy effect here, in that there is some older catalog that will continue to sell indefinitely. But-

 Hmm.

 ... especially stuff that is published more recently, because it has to compete with such a broad volume, the sort of the, the, the shelf life, pardon the pun, keeps getting smaller and smaller for a lot of titles. And so, you know, you may have this significant catalog that can earn revenue for a long period of time, but there is a degree of decay there. And the last thing someone looking at growth wants, is, is decay, right?

That said, there has been some interesting models developed. So I'm thinking of Open Road Media, for example, which, you know, got into the business of, of, of going through, um, back lists and finding popular titles that were not currently licensed for e-books-

 Hmm.

 ... and acquiring the licenses from the authors, the author's estate and publishing new editions of those, and has created a, a quite nice business, uh, around that. So you see some of that innovation, but a lot of it is, is, you know, you, to your point. You've got this, this valuable asset, but it does have a decay function to it, and that's something that a lot of those growth-minded people are going to shy away from.

Richard Kramer: And if I could pick up on just two things, very quickly, that you mentioned. One, is, you talked shelf space. And then, just ahead of using the word books, you used that sort of elusive fifth letter in the language, E, which, which clearly e-commerce has had a huge change in how that shelf space is considered, because we're not talking about the 50 or 100,000 titles that a book shop can put on the shelves anymore. We're talking about the 20 million in, in the Amazon, or, or any other purveyors' warehouse.

So, how has the, the process of, of producing those books and storing them, and delivering them to consumers changed with that huge wave of e-commerce that we've seen taking over the publishing world in the past 20 years, and indeed, maybe e-books not having had the impact that some people thought they would have 10, 15, 20 

Andrew Savikas: years ago?

 Sure, Richard. I, I'm gonna separate your, your two Es, there. There's the e-commerce side. And the story there is, I think, the one that everyone talks about and knows about in the publishing industry, and that's Amazon.

It's always been an industry where there was very little connection between the publishing company and the end-reader. Publishing has long been a B2B business, where you had sales reps calling on accounts and selling books to retailers. And at one point, it was a lot of independents; and then over time, you had the chains. And then as you moved into the e-commerce age, it's really just Amazon in terms of driving e-commerce sales. And, there's some, you know, recently you have bookshop.org, for example, which has done, you know, tens of millions of dollars in sales, but that's, that's nothing compared to what, with Amazon does.

 Right.

 And, you know, the, the challenge there is, publishers were never great at, at selling direct anyway. That wasn't their business, and, and no one else figured out how to successfully compete with Amazon on a large scale.

 I'd like to think that my, one of my prior employers, O'Reilly Media, we had a, a great direct business there, but that was in some- something of a niche within the industry. On the e-books side, I, I will be the first to admit, that I was one of the ones that thought it was really going to take over the world and it was going to be, you know, quickly, the majority of reading was going to be electronic and, and I certainly will acknowledge being wrong about that. At the same time, it has, um, allowed us to use the mobile devices we carry around with us all the time as always on 24/7 bookstores. Um, and for a certain kind of book and a certain kind of reader, its a tremendous new opportunity to access material.

But to the point earlier about the l-level of time commitment a book requires, its just a lot harder to fit into your day, especially the days that we keep chopping up as compared with all the other, you know, endorphin friendly entertainment candy that we can fill our, our screens with.

Will Page: Before we get to the break, a very quick anecdote and then a question for you. Uh, when I learned that my book, Tarzan Economics: Eight Principles for Pivoting Through Disruption, was in production, this is right about the second week of January of this year. I called up Adrian Furnham, a very famous organization psychologist at UCL, 45 books to his name, 5,000 published papers. I was crying, I was like, "Adrian, finally somewhere in the middle of England, somebody is producing 30,000 copies of my book. A book dedicated to my parents, it's happening, Adrian!"

And his words were, "Well done, Will." Remember he is a psychologist, "Well done Will. Congratulations, you're very talented, the book will be a great success. And I want you to sit down carefully, reflect for a minute, because you're about to learn what it means to be a sperm donor, because that's all you ever are in the book industry."

Never a truer word was said. I'm just one sperm on the Petri dish desperately trying to find an egg. So just walk me through production and consumption. How many sperms are there and how many actually find eggs?

Andrew Savikas: That's a very interesting uh, metaphor for the book publishing process. And there have always been far more manuscripts out there than publishing capacity to print them. What's different now is, is you know, 50 years ago, there were only a few people who could've afford the capital required or just the, the cost required to finance a print run. We're in a different age now, you got platforms like Wattpad out there, places where people can, can publish book length material and get a lot of feedback.

But in the traditional kind of publishing industry, um, y-you do have this wealth of potential manuscripts and its still the case that as with many creative endeavors, and I'm sure this is true with music too, the saying in publishing is, "The first print run is your market research." It is still maddeningly difficult to know what's going to work and there's, there's sort of apocryphal stories about publishing companies, you know, getting acquired by big conglomerates bringing in their fancy consultants who come in, look around, do the numbers, and say, "Well, I solved your problem. What you have to do is print more of the best sellers and, and fewer of the ones that don't sell."

Will Page: It 

reminds me, it reminds me of Guy Hands, when he bought EMI, he said, "Record labels sign 10 acts and hope that ones going to be a hit. I want to turn that ratio between one of two." I said to him, "Perhaps you should go to the casino and put your chips on red then."

Richard Kramer: We need to wrap up our first half and we've gone from three-Martini lunches to sperm donorship and uh, and everything in between. The one obviously apocryphal story on that front is, is obviously Bloomsberry, where you know, they had no idea when they published this first kind of strange, typical Joseph Campbell hero's journey book called Harry Potter that they would have a global phenomenon on their hands that would turn a, a, one author on the planet, I don't know how many others there are, but I don't think there are very many, into a billionaire and totally transform the nature of small scale publishing and that was, was clearly a roll of the dice that they didn't even remotely anticipate and was, was beyond their wildest dreams.

I'd like to come back in the second half, get Will going on this notion of how you sort out hyper competition and then maybe we can ask Andrew for some of the smoke signals, the kind of things that when you hear a publishing industry executive say them to you, you just roll your eyes and wince. The kind of things that you really want to w-watch out for as, as knowing that the, the sector has, has succumbed to Bubble Trouble as opposed to kept its feet on the ground. But it sounds like with the a million books published every year around you, its hard to find out where that ground it. So back in a moment with the second half of Bubble Trouble.

Will Page: Back again with part two of Bubble Trouble, where this time we're discussing hyper competition in the world of books, that's books with three O's not two in Scotland. And we're here with Andrew Savikas, who knows more than anybody else about book industry, but given that everyone else seems to know nothing, that's a pretty low bar but we are certainly enjoying your insights, Andrew.

Lets come back to sperm donors. As an author who's producing sperm, desperately trying to find an egg and make this book a success, there is an awful lot of sperm coming out this year. And I'm interested in this balance of how many misses do you need to have in order to get a hit? So talk me through ratios, talk me through returns, talk me through the way that publishers go to the casino in order to get that one sperm to get lucky with that one egg, give me the odds.

Andrew Savikas: Fair enough. The odds, unfortunately, are not very good. The last data point I could find is, is a little bit, a few years back now, um.

Will Page: I'm on a 

Petri dish and I'm getting cold here, man. You gotta get me 

this egg.

 [Laughs] but looking at uh, according to Nelson Book Scan, which tracks point sell data for book sellers, about 2% of the books published, uh, sold in a year uh, have, have sales of more than, more than 5,000 copies. So the vast majority of books-

 Ouch.

 ... do not sell very many copies.

 And, and is 5,000 like a bench mark of recovering your costs? You're good at 5,000 or, I guess, the question of how much you 

press up, right?

Andrew Savikas: Sure, its going to vary quite a bit depending on the publisher. Um, so some publishers, 5,000, 10,000, that's a pretty decent front list title and hopefully it will continue to earn money over time on the back list. But of course, if you've spent 100,000, 500,000, a million dollars on an author advance, that's not going to do it for you. So, there is something of an arms race. I mean, we talked earlier about the, the challenging economics of this industry, is everyone's trying to go for that big hit and willing to pay for the big name that's going to do it. But splaying out the significant advances just means you're, you're raising the bar even higher to how many copies have to sell to earn that back.

So, unfortunately, Will, the odds are not that great.

 All 

right. Let me get it something which I think, Richard Kramer will be digging on here which is, does that increase in equality the advances you're seeing being laid out? The publisher goes to the casino, they're betting even bigger on those very few hits, meaning they got even less to spend on that [inaudible 00:18:23]. Are you seeing that kind of widening in equality in terms of the advances that are offered?

 Publishers have started to adapt a bit to that and are putting more into the back list. For a long time I think it was sort of, "Hey, the back list revenue is great. We're going to take it where we can 

get it. We're going to do what we can to support it." But it wasn't really a priority and all the marketing was really spent on the front list. And what publishers have figured out is a positive thing about having no book ever go out of print is that when a current, something happens in the news um, that brings up a topic. For example, last year all of a sudden there was a significant interest in books about the 1918 Spanish Flu and a lot of these titles had probably barely sold anything in the last 10 or 20 years. And all of a sudden, because they were there, they could, they could drive sales.

And publishers had started to figure out that if they're careful and cautious and thoughtful about it, they can do targeted Facebook ads and drive sales and interest in back list titles along with current events and things happening in the news, which, which does help.

Richard Kramer: So, 

one of the things in, in Bubble Trouble we're really interested in is, is the way in which companies or industries a-are obliged to kind of stay in their lane or realize that they need to get into another one. And we've seen these big advances for big names, whether it's the Obama's, and we see the treadmill of, of whether it's Lee Child or Tom Clancy, the kind of, the mega hits that you know are going to come out with a book every year.

But, I'm also mindful that seeing Will do his book, Tarzan Economics, he's got a book, he's got a website, he's got a podcast, he does media, he does speaking events. How is the industry coping with this sort of structural change from publishing, which is, lets, let's produce a bunch of pages, glue them together and ship them out in cardboard boxes to a much broader range of multimedia they got to do in terms of promotion, and even in terms of ways to monetize the exact same content but not by publishing it?

Andrew Savikas: Yeah, that's a great question and there's a fascinating kind of paradox in the publishing industry about this. So, you mentioned someone like Tom Clancy or you know, Will Page similarly famous authors. Um, to be successful in the modern media ecosystem, you do need what's referred to in the industry as a platform. What, what's your newsletter size, your Twitter following, how many on Instagram, what's your blog look like? And the more you already have that, the more attractive you are to a publisher.

Um, at the same time, the more you have that, the less you actually need the publisher. And so there's this really interesting tension there where the publishers are saying, "Well, id love to look at your manuscript, tell me more about your platform." Because they know that's a really effective means of growing an audience and helping to market the book. At the same time, uh, a lot of people who do have those are saying, "You know, I'm only getting a small point, percentage of the revenue. You're supposed to be doing all the work here."

Will Page: Yeah, that's right. The ratio, the publisher owns 80% of your book, but you're asked to do 80% of the work. I haven't met an author who hasn't irked at that observation. They just couldn't do the math 

themselves.

Andrew Savikas: A-absolutely, and at the same time, there is certainly an interest I think among some publishers to try to do more to support authors but, building websites and helping grow social media accounts is not in the core competencies of a publishing industry and it's, it's a big challenge.

 Yeah, my publisher asked me what a data dashboard was and assumed it was something you found on your car.

 [laughs]

Richard Kramer: Richard is going to get you smoking on some signals, but before we get into that, I want to get this NFT question covered off because a lot of talk about NFTs in music as you know. NFTs are spreading into other forms of media and there's been some articles about NFTs for books. Can you tackle it in two steps, firstly, just walk me through the copyright issues around NFTs. My understanding is as soon as a retailer purchases a book from a wholesaler, that book is officially public domain, the doctrine of first sale. Then secondly, if you were to do an NFT of a book, is it the book that's NFT'd or is it the art that actually becomes NFT? Let's go to the copyright question first.

 Sure, and ill preface this by saying I am not a lawyer, but what I understand about this is you're absolutely right, there is this notion of the first sale doctrine and if you go to your bookstore and you buy the book, then you can do what you'd like with it in terms of reselling it to a used bookstore or giving it to a friend or you know, doing other things.

 You, you can't do it with the digital book?

 Aha, that's the thing. So, if you, all of us, every day, multiple times a day click through lots of terms of services and check boxes and say, "Yeah, I agree.", Whatever, right? We call 

that the data donation agreement [laughs]. That is what I, I regularly refer to that as the, that is the data donation agreement. I have agreed to donate all my data without ever reading. And the privacy policies of Google, Facebook, Microsoft, Amazon, all these guys, they are somewhere between 7,000 and 12,000 words long.

 Richard, I don't 

Will Page: know whether you got the Pfizer vaccine, but we got to get you to congress quickly because they're discussing this right now.

Andrew Savikas: So the, part of the data donation agreement that uh, you sign when you buy an e-book is that you're not actually buying an e-book, you are licensing that book from the retailer and that's the difference there. So that's why you have this, this inability to, you know, resell an, an e-book. At least in, in most places where you buy them today.

On the NFT side, you know, this is still the wild west with NFTs and there's lots of different ways to, to do this. And certainly some people in the publishing industry are thinking, "Well, if this is this unique identifiable digital thing, can't that function as a form of copy protection Or something like that on, on an e-book?" I don't think quite so. There's nothing that will prevent someone from, just like you know, if, if the NFT is pointing to ownership of a gif, someone else could just copy that gif themselves. Same thing with the content there.

Two things that I, I think are interesting with NFTs is one is creating collectable editions, where you are not just selling the book, you're selling some limited thing that probably entitles you to access to the author or something like that. I think an NFT is a great way to implement that behind the scenes, the sort of pluming of it.

The other side of it is the way that rights are managed in the industry is still, at least in my view, pretty inefficient compared to what we do in other industries. And, you know, I know, Will, I learned a lot about the way right societies work in reading your book and, and there's really nothing like that and nowhere near the scale of efficiency there and I, I wonder if there's an opportunity to apply the technology that underpins NFTs to, rather than just sort of silly cat gifs um, facilitate uh, better transactions for books.

 Just a 

Will Page: quick one and ill hand you over to Richard to get you smoking, but, there is still no efficient way to license lyrics and books, which is why you never see lyrics and books. Lyrics should be all over books, books are personal, lyrics are personal. You cannot get a license for lyrics and books. Richard, let's get smoking.

Richard Kramer: Yeah, um, so what we try and do on Bubble Trouble is give everyday people uh, the tools to understand when there's bubbles forming and there could be trouble, looking at the language of the markets. And, and certainly in industry after industry, there have to be those couple of things that you hear top managements say. One of my favorite examples is you know, when managements use the word strong. "We had another strong set of titles this quarter." What does that mean? They were weight lifting books, who knows. Um, or they were just very heavy books because we did them all in hardback with laminated pages.

 Richie, 

Will Page: Richie, I got a better one, I've got a better one. In music, when you have to give feedback on an album you've never listened to, you simply describe it as being too angular. Hey, Andrew, that record you release? It's a little too angular, make it less angular, you've got a hit. In books, I've seen this expression used time and time again, Andrew, and you're going to wince when I say this. Let's say Richard's published a new book and I've not bothered to read but I've been asked to review it, you say, "Richard's marshals his material incredibly well. Richard's really good at marshaling his..." What the F-U-C-K is marshaling material?

Richard Kramer: There you go. Get those, get those comments standing in line. So can you help us understand a couple of of smoke signals, things that when you hear a publishing exec say, they just make you cringe and you realize, "These guys have gone off the reservation and 

lost the plot?"

Andrew Savikas: Sure thing, sure thing. Well, o-one thing I, I hear a lot and I maybe wouldn't put it as strongly as you do, but I hear a lot of publishers say, "We need to grow our direct consumer strategy." You

Richard Kramer: Welcome to Bubble Trouble, conversations between the economist and author, Will Page, and myself, independent analyst Richard Kramer, where we lay out some inconvenient truths about how financial markets really work.

Today, we're in conversation with our four special guests, discussing the topic of hyper competition in the written and spoken word. More in a moment.

Welcome to Bubble Trouble. I want to welcome along my co-host, Will Page. Hey, Will.

 Great 

Will Page: to be here talking about my favorite Scottish word, 

Richard Kramer: books.

 Books. And welcome our special guest today, Andrew Savikas.

Andrew Savikas: Thanks, Richard, I'm thrilled to be here. I'm currently the chief strategy officer at Get Abstract, the world's largest provider of book summaries. And before that, I had executive positions at Safari Books Online and O'Reilly Media, and I actually wrote a book for O'Reilly Media way back 2004, about, of all things, writing word macros. So, I've been, uh-

 [laughs]

 ... I know how the sausage is made, and I'm looking forward to talking to you guys about it.

Will Page: So you, you wrote your book just before iTunes came to Europe, so that's how we're gonna date you, my friend.

We're here to talk about hyper competition, which we've tried to summarize is that point where quantity increases and quality decreases. But if we look back on previous episodes, Andrew, it's interesting that we've talked about advertising, which has to make a connection within four seconds. We've talked about music, which has to make a connection in under four minutes. Then we talked about podcast, which has to make a connection in under 40 minutes. But, we're here to talk about that favorite Scottish word, books, again. And, you know, it's interesting for me that it takes four weeks to finish a book. Perhaps for Richard Kramer, it takes four days to finish a book. It's taking up a lot of time. It's sort of this battle for attention, for the scarce attention. We're talking about the topic which takes up a lot of our time, and I want to understand over the course of, like, 25 minutes, how does that industry survive.

But firstly, let's just take a trip down memory lane. The book industry hasn't changed much in the past 20 or 30, but what puzzles me is, so many opportunities to change things have passed it by. So could you just give us a kind of greatest hits of successes or failures of the book industry from your perspective over the past, let's say, till 

Andrew Savikas: 2004?

 Sure, that's a great question. And, it's true that not a lot seems to have changed about the book industry, and that's in part because not a lot changes about books, from the reader's perspective. Now, technology has been around for a thousand years or more now, right? And, a lot of the innovation happened quite a bit ago. So, my favorite example is that it took the hyphen several hundred years to make it from, you know, Germany to the UK. Page numbering, indexing, tables of content, word spacing, all these things were, in their time, innovation and technology innovation.

My... One of my favorite quotes comes from, uh, Allan Kay, who said, "Technology is anything that was invented after you were born. Uh, everything else is just stuff." And, all these things did happen for a very long time, and the form factor, as it were, you know, was pretty much in place.

Of all of the innovation that has happened, it has actually been kind of behind the scenes. Uh, a lot of things that have to do with distribution, and sales, and marketing. I mean things, again, stuff we think is just stuff, like paperback books, were a significant innovation that brought a wider range of, of reading options to a much wider, mass-affluent audience following the post-war generation.

And something else, I, I would say the most interesting innovation in publishing in last, since 2004, is the opportunity to take things that used to have to be books and make them much more usable. There's a whole category of books that are essentially printouts of databases. If you think about a dictionary or a telephone book, even an atlas.

 Wow.

 It's surprisingly more effective and more efficient to have Google Maps, or just plain Google, to have the database itself, rather than the printout in Codex form.

 Mm-hmm [affirmative]. Yeah, 

Richard Kramer: one of the things that springs to mind is when I first came to London 30 years ago, living without a London A to Z book, which came in every size from three-inches diagonal to 15 or 16-inches diagonal. I mean, living without the A to Z in London was impossible. And now, I guess they're just museum relics.

Now, since this podcast is constantly thinking about markets and how they affect the way we think and the language they use, can you talk us through what I know has become an incredibly concentrated ownership structure in the book industry, with these sort of giant conglomerates. Was this really driven by industrial logic, that really it was only one of these giant publishers that could take a popular title and translate it into the 86 languages that potentially were markets for it? Or was it driven by the kind of financial imperative, or logic, if you want to call it that, that we're constantly debunking on this podcast where the beneficiaries are more the private equity funds or shareholders, less the companies themselves or the end, end consumers of the product?

Andrew Savikas: It's an interesting evolution of the industry that, you know, people who live through it have fascinating stories to tell about how it went from this very cordial, old school, old boys club of famous authors coming through and having three-Martini lunches, and this great, fun time to be in places like New York and London.

And then following on, the growth of conglomeration across many industries, um, there was this sense of, "Well, this could be a, another industry to, to bring into that model." Um, but, unfortunately, the realities of publishing are, in, in, in many ways, the people who do it don't, don't do it for the money. It's an industry that, that is treated a lot more like a vocation, and, and in some ways, um, something that people do because they're passionate about it, rather than about money. And that, in some ways that, that can de- depress some of the, the economic, uh, realities of the industry.

And one of my favorite stories is that when General Electric acquired RCA in 1986, at the time, at least, it was a very well-run company. It immediately shut down two underperforming divisions that did not meet its standards of profitability. The first was a poultry grower, and the second was Random House. Um, [laughs]-

Richard Kramer: [laughs] Yes. Yeah, I was gonna say that, Will, that sounds a heck of a lot like the music industry, because another podcast about hyper competition, we've wondered what prompts the... is it 65,000 tracks that are uploaded to Spotify every week from people's bedrooms?

 Every day. Every day. Every day.

 Every day, and we obviously all don't have the wherewithal to write a book every day, but it sounds like you're, you're dealing with a huge, uh, uh, explosion of supply and very little ways to monetize that in terms of profitable demand.

Andrew Savikas: That's exactly right. And so, there are two really important categories of books to think about. One is the front list, and this is the books that a publishing company, in broad strokes, the new books they publish in a given year, for example.

 Mm-hmm [affirmative].

 The other category is the back list, which is everything they have already published in the past. And, a, a huge amount of the profits in publishing come from the back list, because those costs have already been spent, and so it's besides the, the marginal cost of printing a new book, um, it's a significant source of profit the publishing industry.

Uh, the front list is become quite a battleground. As you've pointed out, the number of titles being published has exploded, and so, the number of copies a publisher can expect to sell of a given book has gone down.

 Wow.

 So you have to, in this frantic sort of treadmill of publishing more title to earn the same amount of revenue, which continues to feed the over-supply. Um, and at the same time, the back list which used to be maybe a few hundred-thousand titles is now pushing 20 million, because nothing ever has to go out of print anymore. And those two things together have dramatically altered the economics of the industry and driven a lot of the consolidation that you're seeing.

 You're reminding me of one of my favorite childhood books, Alice in Wonderland and the famous Red Queen race where it said, "You have to run as fast as you possibly can just in order to stand still."

 That's exactly right. That's the situation that we're in, where it's a very logical response to say, "Well, if my average revenue per title is going down, I can solve that by printing more or publishing more titles." Um, but again, it just feeds into this treadmill.

Richard Kramer: So, how come no one of these financially-minded publishers has sa-, taken the approach that, "Look. You know what? Let's just diminish the importance of this front list. Let's not publish so many titles, and let's just milk that back catalog"? Because, we certainly see that, and Will can speak to this, in the music industry, where the rights of, of artists that are now dead and buried are transacting from hand to hand for hundreds of millions.

 That's right, 

Will Page: Richard. Just to jump in quickly, I think the Universal IPO prospectus said that 30% of their business was front line and 70% was catalog. The money's made at the back, not at the front of the 

Andrew Savikas: release 

Richard Kramer: schedule.

 So hasn't any clever private equity boffin said, " You know what? We'll buy one of these publishers, stop publishing books [laughs]-"

 [laughs]

 "... and, and just milk the, the long-dead authors that we can, that we have the rights 

Andrew Savikas: for"?

 Yeah, I mean, you do see some of that. You know, the challenge there is, you have something of the, the kind of Lindy effect here, in that there is some older catalog that will continue to sell indefinitely. But-

 Hmm.

 ... especially stuff that is published more recently, because it has to compete with such a broad volume, the sort of the, the, the shelf life, pardon the pun, keeps getting smaller and smaller for a lot of titles. And so, you know, you may have this significant catalog that can earn revenue for a long period of time, but there is a degree of decay there. And the last thing someone looking at growth wants, is, is decay, right?

That said, there has been some interesting models developed. So I'm thinking of Open Road Media, for example, which, you know, got into the business of, of, of going through, um, back lists and finding popular titles that were not currently licensed for e-books-

 Hmm.

 ... and acquiring the licenses from the authors, the author's estate and publishing new editions of those, and has created a, a quite nice business, uh, around that. So you see some of that innovation, but a lot of it is, is, you know, you, to your point. You've got this, this valuable asset, but it does have a decay function to it, and that's something that a lot of those growth-minded people are going to shy away from.

Richard Kramer: And if I could pick up on just two things, very quickly, that you mentioned. One, is, you talked shelf space. And then, just ahead of using the word books, you used that sort of elusive fifth letter in the language, E, which, which clearly e-commerce has had a huge change in how that shelf space is considered, because we're not talking about the 50 or 100,000 titles that a book shop can put on the shelves anymore. We're talking about the 20 million in, in the Amazon, or, or any other purveyors' warehouse.

So, how has the, the process of, of producing those books and storing them, and delivering them to consumers changed with that huge wave of e-commerce that we've seen taking over the publishing world in the past 20 years, and indeed, maybe e-books not having had the impact that some people thought they would have 10, 15, 20 

Andrew Savikas: years ago?

 Sure, Richard. I, I'm gonna separate your, your two Es, there. There's the e-commerce side. And the story there is, I think, the one that everyone talks about and knows about in the publishing industry, and that's Amazon.

It's always been an industry where there was very little connection between the publishing company and the end-reader. Publishing has long been a B2B business, where you had sales reps calling on accounts and selling books to retailers. And at one point, it was a lot of independents; and then over time, you had the chains. And then as you moved into the e-commerce age, it's really just Amazon in terms of driving e-commerce sales. And, there's some, you know, recently you have bookshop.org, for example, which has done, you know, tens of millions of dollars in sales, but that's, that's nothing compared to what, with Amazon does.

 Right.

 And, you know, the, the challenge there is, publishers were never great at, at selling direct anyway. That wasn't their business, and, and no one else figured out how to successfully compete with Amazon on a large scale.

 I'd like to think that my, one of my prior employers, O'Reilly Media, we had a, a great direct business there, but that was in some- something of a niche within the industry. On the e-books side, I, I will be the first to admit, that I was one of the ones that thought it was really going to take over the world and it was going to be, you know, quickly, the majority of reading was going to be electronic and, and I certainly will acknowledge being wrong about that. At the same time, it has, um, allowed us to use the mobile devices we carry around with us all the time as always on 24/7 bookstores. Um, and for a certain kind of book and a certain kind of reader, its a tremendous new opportunity to access material.

But to the point earlier about the l-level of time commitment a book requires, its just a lot harder to fit into your day, especially the days that we keep chopping up as compared with all the other, you know, endorphin friendly entertainment candy that we can fill our, our screens with.

Will Page: Before we get to the break, a very quick anecdote and then a question for you. Uh, when I learned that my book, Tarzan Economics: Eight Principles for Pivoting Through Disruption, was in production, this is right about the second week of January of this year. I called up Adrian Furnham, a very famous organization psychologist at UCL, 45 books to his name, 5,000 published papers. I was crying, I was like, "Adrian, finally somewhere in the middle of England, somebody is producing 30,000 copies of my book. A book dedicated to my parents, it's happening, Adrian!"

And his words were, "Well done, Will." Remember he is a psychologist, "Well done Will. Congratulations, you're very talented, the book will be a great success. And I want you to sit down carefully, reflect for a minute, because you're about to learn what it means to be a sperm donor, because that's all you ever are in the book industry."

Never a truer word was said. I'm just one sperm on the Petri dish desperately trying to find an egg. So just walk me through production and consumption. How many sperms are there and how many actually find eggs?

Andrew Savikas: That's a very interesting uh, metaphor for the book publishing process. And there have always been far more manuscripts out there than publishing capacity to print them. What's different now is, is you know, 50 years ago, there were only a few people who could've afford the capital required or just the, the cost required to finance a print run. We're in a different age now, you got platforms like Wattpad out there, places where people can, can publish book length material and get a lot of feedback.

But in the traditional kind of publishing industry, um, y-you do have this wealth of potential manuscripts and its still the case that as with many creative endeavors, and I'm sure this is true with music too, the saying in publishing is, "The first print run is your market research." It is still maddeningly difficult to know what's going to work and there's, there's sort of apocryphal stories about publishing companies, you know, getting acquired by big conglomerates bringing in their fancy consultants who come in, look around, do the numbers, and say, "Well, I solved your problem. What you have to do is print more of the best sellers and, and fewer of the ones that don't sell."

Will Page: It 

reminds me, it reminds me of Guy Hands, when he bought EMI, he said, "Record labels sign 10 acts and hope that ones going to be a hit. I want to turn that ratio between one of two." I said to him, "Perhaps you should go to the casino and put your chips on red then."

Richard Kramer: We need to wrap up our first half and we've gone from three-Martini lunches to sperm donorship and uh, and everything in between. The one obviously apocryphal story on that front is, is obviously Bloomsberry, where you know, they had no idea when they published this first kind of strange, typical Joseph Campbell hero's journey book called Harry Potter that they would have a global phenomenon on their hands that would turn a, a, one author on the planet, I don't know how many others there are, but I don't think there are very many, into a billionaire and totally transform the nature of small scale publishing and that was, was clearly a roll of the dice that they didn't even remotely anticipate and was, was beyond their wildest dreams.

I'd like to come back in the second half, get Will going on this notion of how you sort out hyper competition and then maybe we can ask Andrew for some of the smoke signals, the kind of things that when you hear a publishing industry executive say them to you, you just roll your eyes and wince. The kind of things that you really want to w-watch out for as, as knowing that the, the sector has, has succumbed to Bubble Trouble as opposed to kept its feet on the ground. But it sounds like with the a million books published every year around you, its hard to find out where that ground it. So back in a moment with the second half of Bubble Trouble.

Will Page: Back again with part two of Bubble Trouble, where this time we're discussing hyper competition in the world of books, that's books with three O's not two in Scotland. And we're here with Andrew Savikas, who knows more than anybody else about book industry, but given that everyone else seems to know nothing, that's a pretty low bar but we are certainly enjoying your insights, Andrew.

Lets come back to sperm donors. As an author who's producing sperm, desperately trying to find an egg and make this book a success, there is an awful lot of sperm coming out this year. And I'm interested in this balance of how many misses do you need to have in order to get a hit? So talk me through ratios, talk me through returns, talk me through the way that publishers go to the casino in order to get that one sperm to get lucky with that one egg, give me the odds.

Andrew Savikas: Fair enough. The odds, unfortunately, are not very good. The last data point I could find is, is a little bit, a few years back now, um.

Will Page: I'm on a 

Petri dish and I'm getting cold here, man. You gotta get me 

this egg.

 [Laughs] but looking at uh, according to Nelson Book Scan, which tracks point sell data for book sellers, about 2% of the books published, uh, sold in a year uh, have, have sales of more than, more than 5,000 copies. So the vast majority of books-

 Ouch.

 ... do not sell very many copies.

 And, and is 5,000 like a bench mark of recovering your costs? You're good at 5,000 or, I guess, the question of how much you 

press up, right?

Andrew Savikas: Sure, its going to vary quite a bit depending on the publisher. Um, so some publishers, 5,000, 10,000, that's a pretty decent front list title and hopefully it will continue to earn money over time on the back list. But of course, if you've spent 100,000, 500,000, a million dollars on an author advance, that's not going to do it for you. So, there is something of an arms race. I mean, we talked earlier about the, the challenging economics of this industry, is everyone's trying to go for that big hit and willing to pay for the big name that's going to do it. But splaying out the significant advances just means you're, you're raising the bar even higher to how many copies have to sell to earn that back.

So, unfortunately, Will, the odds are not that great.

 All 

right. Let me get it something which I think, Richard Kramer will be digging on here which is, does that increase in equality the advances you're seeing being laid out? The publisher goes to the casino, they're betting even bigger on those very few hits, meaning they got even less to spend on that [inaudible 00:18:23]. Are you seeing that kind of widening in equality in terms of the advances that are offered?

 Publishers have started to adapt a bit to that and are putting more into the back list. For a long time I think it was sort of, "Hey, the back list revenue is great. We're going to take it where we can 

get it. We're going to do what we can to support it." But it wasn't really a priority and all the marketing was really spent on the front list. And what publishers have figured out is a positive thing about having no book ever go out of print is that when a current, something happens in the news um, that brings up a topic. For example, last year all of a sudden there was a significant interest in books about the 1918 Spanish Flu and a lot of these titles had probably barely sold anything in the last 10 or 20 years. And all of a sudden, because they were there, they could, they could drive sales.

And publishers had started to figure out that if they're careful and cautious and thoughtful about it, they can do targeted Facebook ads and drive sales and interest in back list titles along with current events and things happening in the news, which, which does help.

Richard Kramer: So, 

one of the things in, in Bubble Trouble we're really interested in is, is the way in which companies or industries a-are obliged to kind of stay in their lane or realize that they need to get into another one. And we've seen these big advances for big names, whether it's the Obama's, and we see the treadmill of, of whether it's Lee Child or Tom Clancy, the kind of, the mega hits that you know are going to come out with a book every year.

But, I'm also mindful that seeing Will do his book, Tarzan Economics, he's got a book, he's got a website, he's got a podcast, he does media, he does speaking events. How is the industry coping with this sort of structural change from publishing, which is, lets, let's produce a bunch of pages, glue them together and ship them out in cardboard boxes to a much broader range of multimedia they got to do in terms of promotion, and even in terms of ways to monetize the exact same content but not by publishing it?

Andrew Savikas: Yeah, that's a great question and there's a fascinating kind of paradox in the publishing industry about this. So, you mentioned someone like Tom Clancy or you know, Will Page similarly famous authors. Um, to be successful in the modern media ecosystem, you do need what's referred to in the industry as a platform. What, what's your newsletter size, your Twitter following, how many on Instagram, what's your blog look like? And the more you already have that, the more attractive you are to a publisher.

Um, at the same time, the more you have that, the less you actually need the publisher. And so there's this really interesting tension there where the publishers are saying, "Well, id love to look at your manuscript, tell me more about your platform." Because they know that's a really effective means of growing an audience and helping to market the book. At the same time, uh, a lot of people who do have those are saying, "You know, I'm only getting a small point, percentage of the revenue. You're supposed to be doing all the work here."

Will Page: Yeah, that's right. The ratio, the publisher owns 80% of your book, but you're asked to do 80% of the work. I haven't met an author who hasn't irked at that observation. They just couldn't do the math 

themselves.

Andrew Savikas: A-absolutely, and at the same time, there is certainly an interest I think among some publishers to try to do more to support authors but, building websites and helping grow social media accounts is not in the core competencies of a publishing industry and it's, it's a big challenge.

 Yeah, my publisher asked me what a data dashboard was and assumed it was something you found on your car.

 [laughs]

Richard Kramer: Richard is going to get you smoking on some signals, but before we get into that, I want to get this NFT question covered off because a lot of talk about NFTs in music as you know. NFTs are spreading into other forms of media and there's been some articles about NFTs for books. Can you tackle it in two steps, firstly, just walk me through the copyright issues around NFTs. My understanding is as soon as a retailer purchases a book from a wholesaler, that book is officially public domain, the doctrine of first sale. Then secondly, if you were to do an NFT of a book, is it the book that's NFT'd or is it the art that actually becomes NFT? Let's go to the copyright question first.

 Sure, and ill preface this by saying I am not a lawyer, but what I understand about this is you're absolutely right, there is this notion of the first sale doctrine and if you go to your bookstore and you buy the book, then you can do what you'd like with it in terms of reselling it to a used bookstore or giving it to a friend or you know, doing other things.

 You, you can't do it with the digital book?

 Aha, that's the thing. So, if you, all of us, every day, multiple times a day click through lots of terms of services and check boxes and say, "Yeah, I agree.", Whatever, right? We call 

that the data donation agreement [laughs]. That is what I, I regularly refer to that as the, that is the data donation agreement. I have agreed to donate all my data without ever reading. And the privacy policies of Google, Facebook, Microsoft, Amazon, all these guys, they are somewhere between 7,000 and 12,000 words long.

 Richard, I don't 

Will Page: know whether you got the Pfizer vaccine, but we got to get you to congress quickly because they're discussing this right now.

Andrew Savikas: So the, part of the data donation agreement that uh, you sign when you buy an e-book is that you're not actually buying an e-book, you are licensing that book from the retailer and that's the difference there. So that's why you have this, this inability to, you know, resell an, an e-book. At least in, in most places where you buy them today.

On the NFT side, you know, this is still the wild west with NFTs and there's lots of different ways to, to do this. And certainly some people in the publishing industry are thinking, "Well, if this is this unique identifiable digital thing, can't that function as a form of copy protection Or something like that on, on an e-book?" I don't think quite so. There's nothing that will prevent someone from, just like you know, if, if the NFT is pointing to ownership of a gif, someone else could just copy that gif themselves. Same thing with the content there.

Two things that I, I think are interesting with NFTs is one is creating collectable editions, where you are not just selling the book, you're selling some limited thing that probably entitles you to access to the author or something like that. I think an NFT is a great way to implement that behind the scenes, the sort of pluming of it.

The other side of it is the way that rights are managed in the industry is still, at least in my view, pretty inefficient compared to what we do in other industries. And, you know, I know, Will, I learned a lot about the way right societies work in reading your book and, and there's really nothing like that and nowhere near the scale of efficiency there and I, I wonder if there's an opportunity to apply the technology that underpins NFTs to, rather than just sort of silly cat gifs um, facilitate uh, better transactions for books.

 Just a 

Will Page: quick one and ill hand you over to Richard to get you smoking, but, there is still no efficient way to license lyrics and books, which is why you never see lyrics and books. Lyrics should be all over books, books are personal, lyrics are personal. You cannot get a license for lyrics and books. Richard, let's get smoking.

Richard Kramer: Yeah, um, so what we try and do on Bubble Trouble is give everyday people uh, the tools to understand when there's bubbles forming and there could be trouble, looking at the language of the markets. And, and certainly in industry after industry, there have to be those couple of things that you hear top managements say. One of my favorite examples is you know, when managements use the word strong. "We had another strong set of titles this quarter." What does that mean? They were weight lifting books, who knows. Um, or they were just very heavy books because we did them all in hardback with laminated pages.

 Richie, 

Will Page: Richie, I got a better one, I've got a better one. In music, when you have to give feedback on an album you've never listened to, you simply describe it as being too angular. Hey, Andrew, that record you release? It's a little too angular, make it less angular, you've got a hit. In books, I've seen this expression used time and time again, Andrew, and you're going to wince when I say this. Let's say Richard's published a new book and I've not bothered to read but I've been asked to review it, you say, "Richard's marshals his material incredibly well. Richard's really good at marshaling his..." What the F-U-C-K is marshaling material?

Richard Kramer: There you go. Get those, get those comments standing in line. So can you help us understand a couple of of smoke signals, things that when you hear a publishing exec say, they just make you cringe and you realize, "These guys have gone off the reservation and 

lost the plot?"

Andrew Savikas: Sure thing, sure thing. Well, o-one thing I, I hear a lot and I maybe wouldn't put it as strongly as you do, but I hear a lot of publishers say, "We need to grow our direct consumer strategy." You know, they, they all know its not great to have most of their sales controlled by, by one retailer. Say, "Well, if we sell them ourselves, we can make more money and diversify our sales channel."

And the challenge there is for companies that have very little experience building a direct consumer channel. Um, a lot of times the approach is to put the book for sale on their website and to try and get people to come and buy it. And, you know, a couple things there. One is, nine times out of ten, the metadata they're presenting on the catalog page for the book is identical to the metadata on the catalog page for every other retailer of that book. So, now you're competing for audience with the same essentially content.

 Let me 

step in and the analogy to me there is music streaming services, which if you choose a music streaming service based on what you listen to when you were in high school, right, then every single one of the streaming services is going to have Fleetwood Mac or Elton John or whatever your favorite high school band was. And, if you don't have them, you won't subscribe, but its just table stakes. And from what you're saying is, if I want to buy a new hardback fiction book, there's going directly to the publisher, is no different than going to any of the dozen of outlets that will be offering them and they're ending up alienating their retail partners by trying to do an end 

run around them.

 T-that's exactly right. If what they're selling is the same thing you can buy somewhere else at a lower price, that's a pretty uphill battle.

 Right.

 Especially if your approach is often customer acquisition where you're, you know, fighting for the same, same Facebook ads and the same, the same ad words.

 Right.

 So I think the way to address that is how do you sell something, how do you offer something that someone can't get somewhere else? And that's one of the biggest challenges for publishers who are trying to build a direct business is to have something that's more than just the same book someone can get somewhere else.

Richard Kramer: Right, and what's another smoke signal? Something else that when a publishing exec says that, you say, "Well, we know that's not going to work."

Andrew Savikas: I, I think one of the things I hear a lot in, in conversation about any number of different potential initiatives is well, we can't do X, whatever X is, because it's going to cannibalize our print sales. And, legitimate perspective, at the same time, there's so much evidence now that all these other things that you can do, be they e-books, be they different editions, be they summaries, which is something I do in my, you know, every day. These things are additive and complimentary rather than substitutive and that's something that continues to purvey the industry and I, I really wish we could move beyond that.

Will Page: Yeah, 

yeah, just to jump in on that real quick there, there, you look at streaming and now in the UK, vinyl is more than one pound in every 10 getting to record labels every month now. Worth mode than CDs, cassettes, and downloads put together, [inaudible 00:29:21] which followed it. And it's the people who pay for streaming who also paying for vinyl. No executive would've ever predicted that, but now you're making a ton of money by exploiting it. Popular is popular, whenever it is popular.

And on your point about cannibalization, I just think its fascinating to think about the position of Audible, uh, they're in a very, very clever position because they're one of the few who can balance podcasts, which are one means to an end, that is Richard Kramer's got some fantastic ideas, I want them in my head, I can listen to a podcast, I can read his book. Audio books and then you got the data on hardback and paperback and Kindle copies as well that Audible's in a position to work at how podcasts and books can grow each others gardens. And I think that's quite unique for that company, given everyone else is shooting blind on this topic.

Richard Kramer: And, and maybe as a, a last point to wrap up in a question for you, Andrew, is, is, so are we in a bubble with publishing? With all of these titles coming through every year, with this avalanche of potential, but a Hunger Games scenario for the very few authors that are able to turn it into a living and much more than a paid promotion channel to have your name in print?

Andrew Savikas: You 

know, I, I think, I think yes, we are in a bubble, but ill caveat that by saying, like many, like many other examples, publishing moves more slowly than a lot of other industries. And you can make the case that publishing is actually been in this surplus of supply for a long time. In fact, a lot longer than music.

 Yeah.

 A lot longer than movies or TV, which are just now catching up. And so, I think what you have is the publishing industry is still in that same situation, and it's getting worse every year. But in fact, I think the bubble's going to pop in the other industries first, because the publishing uh, metabolism is just so slow.

 [laughs]

Will Page: Well, yeah we started donating sperm, we finished donating data, but honestly, Andrew, this has been the best podcast of them all so far. Fascinating to learn about the origin of Bubble Trouble. You've been at it, supplying more than its demanded, more than anyone else, for longer than anyone else, so its been an absolute joy listening to you speak. Hopefully, we can get you back on Bubble Trouble again in the future. 

Andrew Savikas: Thank you so much.

 My pleasure, I'd love to. Thanks Will, thanks Richard.

Richard Kramer: If you're new to Bubble Trouble, we hope you follow this show wherever you listen to podcasts. Bubble Trouble is produced Eric Nuzum, Jesse Baker, and Julia Natt at Magnificent Noise. You can learn more at BubbleTroublePodcast.com, Will Page and I see you next time.

know, they, they all know its not great to have most of their sales controlled by, by one retailer. Say, "Well, if we sell them ourselves, we can make more money and diversify our sales channel."

And the challenge there is for companies that have very little experience building a direct consumer channel. Um, a lot of times the approach is to put the book for sale on their website and to try and get people to come and buy it. And, you know, a couple things there. One is, nine times out of ten, the metadata they're presenting on the catalog page for the book is identical to the metadata on the catalog page for every other retailer of that book. So, now you're competing for audience with the same essentially content.

 Let me 

step in and the analogy to me there is music streaming services, which if you choose a music streaming service based on what you listen to when you were in high school, right, then every single one of the streaming services is going to have Fleetwood Mac or Elton John or whatever your favorite high school band was. And, if you don't have them, you won't subscribe, but its just table stakes. And from what you're saying is, if I want to buy a new hardback fiction book, there's going directly to the publisher, is no different than going to any of the dozen of outlets that will be offering them and they're ending up alienating their retail partners by trying to do an end 

run around them.

 T-that's exactly right. If what they're selling is the same thing you can buy somewhere else at a lower price, that's a pretty uphill battle.

 Right.

 Especially if your approach is often customer acquisition where you're, you know, fighting for the same, same Facebook ads and the same, the same ad words.

 Right.

 So I think the way to address that is how do you sell something, how do you offer something that someone can't get somewhere else? And that's one of the biggest challenges for publishers who are trying to build a direct business is to have something that's more than just the same book someone can get somewhere else.

Richard Kramer: Right, and what's another smoke signal? Something else that when a publishing exec says that, you say, "Well, we know that's not going to work."

Andrew Savikas: I, I think one of the things I hear a lot in, in conversation about any number of different potential initiatives is well, we can't do X, whatever X is, because it's going to cannibalize our print sales. And, legitimate perspective, at the same time, there's so much evidence now that all these other things that you can do, be they e-books, be they different editions, be they summaries, which is something I do in my, you know, every day. These things are additive and complimentary rather than substitutive and that's something that continues to purvey the industry and I, I really wish we could move beyond that.

Will Page: Yeah, 

yeah, just to jump in on that real quick there, there, you look at streaming and now in the UK, vinyl is more than one pound in every 10 getting to record labels every month now. Worth mode than CDs, cassettes, and downloads put together, [inaudible 00:29:21] which followed it. And it's the people who pay for streaming who also paying for vinyl. No executive would've ever predicted that, but now you're making a ton of money by exploiting it. Popular is popular, whenever it is popular.

And on your point about cannibalization, I just think its fascinating to think about the position of Audible, uh, they're in a very, very clever position because they're one of the few who can balance podcasts, which are one means to an end, that is Richard Kramer's got some fantastic ideas, I want them in my head, I can listen to a podcast, I can read his book. Audio books and then you got the data on hardback and paperback and Kindle copies as well that Audible's in a position to work at how podcasts and books can grow each others gardens. And I think that's quite unique for that company, given everyone else is shooting blind on this topic.

Richard Kramer: And, and maybe as a, a last point to wrap up in a question for you, Andrew, is, is, so are we in a bubble with publishing? With all of these titles coming through every year, with this avalanche of potential, but a Hunger Games scenario for the very few authors that are able to turn it into a living and much more than a paid promotion channel to have your name in print?

Andrew Savikas: You 

know, I, I think, I think yes, we are in a bubble, but ill caveat that by saying, like many, like many other examples, publishing moves more slowly than a lot of other industries. And you can make the case that publishing is actually been in this surplus of supply for a long time. In fact, a lot longer than music.

 Yeah.

 A lot longer than movies or TV, which are just now catching up. And so, I think what you have is the publishing industry is still in that same situation, and it's getting worse every year. But in fact, I think the bubble's going to pop in the other industries first, because the publishing uh, metabolism is just so slow.

 [laughs]

Will Page: Well, yeah we started donating sperm, we finished donating data, but honestly, Andrew, this has been the best podcast of them all so far. Fascinating to learn about the origin of Bubble Trouble. You've been at it, supplying more than its demanded, more than anyone else, for longer than anyone else, so its been an absolute joy listening to you speak. Hopefully, we can get you back on Bubble Trouble again in the future. 

Andrew Savikas: Thank you so much.

 My pleasure, I'd love to. Thanks Will, thanks Richard.

Richard Kramer: If you're new to Bubble Trouble, we hope you follow this show wherever you listen to podcasts. Bubble Trouble is produced Eric Nuzum, Jesse Baker, and Julia Natt at Magnificent Noise. You can learn more at BubbleTroublePodcast.com, Will Page and I see you next time.