Nobody Knows Nothing

In an earlier post entitled "Me, James Joyce and Nora Barnacle" I modestly suggested that due to shortcomings in their understanding of economics the whole of the publishing industry was based on a flawed business model. What I had in mind was the concept of profit maximisation which all companies claim to embrace whereas in fact virtually none do. I looked at this issue in the later post "The Economic Of The Madhouse" using the airline industry as an example.

To my surprise TNH rather took exception to my stance.

TNH said in a comment, "Do you really think we don't know our own numbers? Economists may have "won Nobel prizes for their work on costing, breakeven analysis and profit maximisation," but as an industry we live and die by our grasp of those issues".

I hadn't twigged at the time that TNH works in the publishing industry and obviously knows the business inside out. So in answer to the question "Do you really think we don't know our own numbers?" my answer now would be, No, the publishing industry doesn't know its own numbers and hasn't grasped the same issues that brought the airline industry to its knees.

There, I've said it. I can already hear the howls of outrage echoing across the ether. Pause a second tho', TNH, before you push the nuclear button and wipe my blog off the face of the ionosphere.

I am second to no-one in my admiration of your knowledge of the publishing industry. Ah. Finger hesitating, huh?

Becauseyou know the publishing game so well I am sure you'll agree that your industry is definitely not one where profit maximising is practised. Take the analogy of the airline industry. All those empty seats left unoccupied because of a flawed ticket pricing model.

Is it possible that the publishing industry doesn't sell every last book that it could because it too has the same outdated pricing model? It isn't just price here either. Do you think the industry really has adopted the kind of low-cost model that Ryanair employs so successfully? I'm sure it constantly trims costs like every other industry, but we're talking about revolutionising the business model here. I don't think so. I'm sure you don't either (see, I can make assumptions about what you're thinking too).

While we're at it, having a flawed business model is only part of your industry's problem.

Take a look at the macro environment in which the publishing industry operates. Media and Entertainment. Where the internet is changing everything. In ways which we are only beginning to understand. And that change is about to accelerate. The known unknowns and the unknown unknowns as Donald Rumsfeld said (and I never in a million years foresaw that I would ever quote him.) The fact is, nobody in any industry today (or in the past come to that) knows what's going to happen next. Sure, we all construct our marketing plans and profit projections but these are just comfort blankets. You cannot, in the end, impose order on chaos.

Rememeber it's all about share of mind and pocket. And there are huge swathes of the market that traditional publishing doesn't serve: men, young men, young people for a start. These folks attention has gone elsewhere. And that's just the start of its shortcomings.

Sure, you're going to tell me that more books are published now than ever before and that more people are reading today than ever did in the past. Maybe. How about that as a share of the expanding world population? Is it growing faster or slower? What about the share of disposable income people spend on books as a proportion of the total spend on leisure? Is it growing? If the answer to either of these questions is negative then your industry is falling behind and will ultimately die.

Okay, that's enough for now. Gee' I wish I could resist a good argument.

Right, I'll just slip on my steel helmet and hunker down in this dugout before the shells start whizzing back over.