Publishing Is a Business

Since everyone has had something to say in the recent kerfuffle over traditional publishing vs. self-publishing vs. I dunno, narwhals or something, I thought that maybe I should jump into the fray with my opinion. What is my opinion?

Tommy, if you please:

Seriously, I don't care. Not much. See, here's my position. I want to do my thing. I want you to be able to do your thing. I'm excited that we have so many options these days to do different things. Yay for us! This is one of those times when I don't understand the forming of "sides" and the pressing need people feel to "convert" others. Is publishing a religion and no one told me? I don't think so. I think it's a business. An industry somewhere on the order of $280 BILLION DOLLARS (not including Internet, whatever they mean by that). If you're not familiar with business, let me clue you in. There are likely to be some varying opinions on how to get your piece of the pie.

I'm not talking about the art and craft here. That's a different thing entirely. And you know what? Art is a helluva subjective thing. It's quite possible that we could find the one perfect piece of fiction in the entire world and it wouldn't sell. Because that's the way life is sometimes. Van Gogh only sold that one painting in his lifetime. To a friend's sister. Sales don't equal quality. Quality doesn't equal sales. Cry about that all you want, but it's the truth. Everyone working on your art? Good. Stay on that. We need awesome books. But let's not bring the writing part into this discussion and only concentrate on publishing and sales because really that's the core of what's being discussed here - the disruption of an industry.

A few people have likened self-publishers to entrepreneurs, and I think that's a fairly accurate connection to make. If publishing is a business then there are a number of roles that need to be played. Prior to the boom of ebooks, if you wanted the "writer" role (and wanted the chance to make a good deal of money at it) you were probably going to need to work with a publishing house. That's because of the capital and connections required to do broad scale publishing. Quite simply, a model that used economies of scale was more successful. There is nothing inherently good or bad in that, it was just what the industry required. Then things changed. Among them, Amazon rather aggressively pursuing the question of "What if we changed the rules a little bit?" Primarily to horn in on the action. If you were to really analyze what goes into making and selling a book, Amazon is only working as the distributor for a self-published author. And making a heck of a percentage in that role. But it means that the key to distribution is accessible and now an author wanting to 'go it alone' only has to, you know, figure out all the other stuff beyond actually writing a book. Editing. Graphic design. Promotion. And managing all of it. A business. If you don't want to manage a business (small though it may be), then self-publishing is obviously not for you. If you salivate over the idea of running your own business, then maybe it's something you should consider. I'm not trying to convince you one way or the other, I'm just saying that publishing is a business and you have more options to participate in that business than you did before.

But do you know what this whole traditional vs. self publishing thing isn't going to do for you? Guarantee your success. Nothing is going to do that. New York can't guarantee that. Amazon can't guarantee that. Your religious figure can't guarantee that. No one can make that happen. Not even you. You can work really, really, really hard at it. But hard work doesn't equal sales, either. It just increases your chances. All of this is about finding the path that best optimizes your chances for being a successful author. Your path probably looks different than mine. That's ok, right? We probably had a different breakfast (unless you had Cheerios and a vanilla latte?) and will talk to different people today. Lots of things are different. Unless we choose to connect and celebrate our sameness, while also choosing to admire and respect our difference, there is just likely to be unpleasantness.

At heart what is my opinion on the trad vs. self fight? I think everyone needs to calm down. The people who actually should be panicking haven't yet. For the rest of us we need to take off our crankypants and take a nap so that we can wake up refreshed and ready to write or publish or fight narwhals, or whatever it is we need to do this afternoon.

In that spirit, here's Uncle Sammy with the exactly right bedtime book for the mood everyone has been in (NSFW or delicate ears):



Note: I have not discussed my opinion on writing or readers in this piece on purpose. This is only about business.

Dystopian or Pragmatic? The Gervais Principle

Do you watch The Office? Would you consider it to be a cynical look at aspects of working life, or a fully realized alternate view of management theory? Venkat at ribbonfarm.com makes a pretty good case for the latter in his post The Gervaise Principle, or The Office According to "The Office."

If we accept the basis that he describes, then a few questions come to mind. First, is this a dystopian alternative view of reality or just a pragmatic one? In other words, do you only see it this way if if you are wearing celadon-colored glasses (or whatever the opposite of rose-colored would be), or do you see it this way if you are seeing clearly? For my own peace of mind I prefer to believe the former because if it is the clearest, truest view of reality then I would like to turn in my library card right now.

However, regardless of how you take it, the obvious next question is: how do I fit in? For myself, I'm obviously clueless. Not having the capacity for sociopathy (and I think that's a GOOD thing) nor much capacity for shirking (again, believing that's good!) I'm simply excluded from both the top and bottom of the hierarchy.

The Princess and the Frog

Oh, how I love, love, LOVE Disney movies. Waiting for The Princess and the Frog has been hard, because there is a wee bit of concern that it could suck and I don't want it suck, especially since it is centered on beloved New Orleans.

Now Disney, knowing my addiction well, has emailed me about the release. It will be nationwide on December 11th and there will be a limited release on November 25th in NY & LA.

I stared at that a long time.

Don't you, I thought, want to include New Orleans in that early release? For a moment my brain even saw it as NOLA (abbreviation for New Orleans, Louisiana if ya'll don't know). But alas, no.

Thank you for the email addressed to me and signed by you, Mr. Lasseter, but come closer, closer. Yes, lean over here and I will grab hold of your funky Hawaiian shirt and we will have words. Are you listening?

THE RIGHT PLACE FOR AN EARLY RELEASE IS NEW ORLEANS. You should have involved yourself in renovating the Saenger (damaged in Katrina) and made the premier of The Princess and the Frog it's grand reopening. Failing that, find a nice theater and make a big deal out of it opening there and put that lovely city all over the news. Make it an event. Make it mean something. This is the first movie we've really had the opportunity to do that with so it amazes me that you didn't think of it yourself.

Marketing Advice: You Can't Make Me Change if I Don't Want To

Do you remember the old Reese's Cup ads that were a little confrontational? "You got your peanut butter in my chocolate!" "You got your chocolate in my peanut butter!" And then they discover that the whole was better than the sum of it's parts and both go away happy.

Ok, so... do you remember when FedEx bought Kinko's? To me this rang with the possibility of Reese's Cups. Two great things that taste great together. I still called the store Kinko's (kinda the way that I call Reese's a peanut butter cup) even though they changed the sign to FedEx Kinko's. But today I just noticed that they changed the sign to FedEx Office. It's like the chocolate got rid of the peanut butter. What's up with that? Further, this makes me feel like they are waiting for me and my breed to die off because I know that for years (possibly years and years) I will continue to call it Kinko's. I will refer to it as Kinko's when talking to friends and co-workers. When I'm looking for another one I will ask people if they know where the Kinko's is. Kinko's has my share of mind and I'm perfectly happy with that. Good luck, FedEx, on making me change. I think of you when something absolutely, positively has to be there overnight, not when I need a copy of my D&D character notes (which, uh, yes, is why I was there today).

One entertainment from this, of course, is that it shows how Generica (the parts of America that are so generic that they are identical from place to place) has recreated in odd ways the feel of small town America. In another ten years knowing what used to be Kinko's will be like old-time directions. Instead of "remember old Johnson's field where that cow used to stand, take a left there" it will be "you know the place that used to be Kinko's, it's right next to that."

Dag-gummit.

It's All About Convenience

Mobile blogging is great for these moments. I was just at a gas station where they couldn't process my card at the pump. The attendant came over the speaker, "Number 16, press the pay inside button and come in after you pump." No. Bad news, but as well as selling me gas you are selling me the convenience of indulging my shyness. As an introvert I have a limited supply of interaction energy and I expended a surplus of it yesterday volunteering time at a call center. So I got back in my car, muttering my signature "you are of no use to me" under my breath, and scooted across the parking lot to the BP on the chance that their pump would work. It did and all was right in my world. They also promised that their gas would invigorate my car, which sort of scares me.
Quite often I doubt that companies really know what they are selling. In case you were wondering, yes. The gas was more expensive at the BP.

Today's Thought

My enthusiasm has been ground to a fine powder that, when mixed with my tears of despair, is used to caulk the crumbling foundation of our management structure.

Agent Simmons says "Ooh. Nokias are real nasty."

This month Fast Company is telling us about Nokia's plans to take over the world in their cover article Nokia Rocks the World: The Phone King's Plan to Redefine Its Business. Take it over and charge us all rent, mind you.

While reading the article I kept finding myself caught between finding cool things in their plan and then wondering whether their business model was downright evil. Alright, maybe evil is a bit strong (no doubt fueled by their description of the VP as "a cross between an Andy Warhol mystic and James Bond villain"), but a giggling enthusiasm for charging farmers in India $1 per month for a cell phone internet app that can help them with weather predictions and market prices seems a little sadistic somehow... because I imagine that is a very steep price for them. When I searched for the average income of an Indian farmer I came across this blog post from Devinder Sharma that cited it at 2,115 Rs in 2003 (that would be $43.28 American at current exchange rates). Could it be much more now? I doubt it. While trying to find a good source there were plenty of articles talking about the impoverished conditions of the Indian farmer, including one article that talked about increased suicide rates. Now, I don't know about you, but I'm trying to imagine spending more than a quarter of my income on a cell phone app (I assume the cost of the cell phone and plan is not included in that). Do I think it would be awesome for everyone in the world to have access to everything through the wonder of inexpensive phones and internet access? Yes I do. I'm just not sure that it can always be a profit thing.

Meanwhile, Fast Company is crazy good, so if you haven't read it consider this to be your sign that you should. It's like the Wired for business. If you don't read Wired either then get on that! Sheesh...

Wow, that's bad

Do you ever have a food item that sounds like it should be good, so you keep ordering it when the memory of the last one fades? That's me with the McDonald's Iced Mocha. This time they have outdone themselves. It tastes like a stale coffee bean that has been rubbed around an ashtray.

Creepy, Abandoned Chi-Chi's...

As many of our readers know, I used to work at Chi-Chi's Mexican Restaurante. I met my husband there and most of my best friends have worked there (as did three of my sisters-in-law). The chain started going downhill when it was sold to Family Restaurants, Inc. in the early 90s and I figured that by now it had died (other than the Hormel salsa and corn cake). Yes, the death knell for Chi-Chi's in America was apparently in 2004 (see Wikipedia entry).

However, the spirit of Chi-Chi's lives on in those of us who remember it's good years. One person collects photos of "Creepy, Abandoned Chi-Chi's" and shares them with us on her blog. Another set up a petition to get Chi-Chi's back in the U.S. Who that petition is going to I have no idea, but I'll sign it if it means I can order a yummy Cancun or shrimp Chajita with a big ole side of corn cake.

Also, if you're willing to go overseas you can check out the ones still in Belgium.

p.s. This company history is more in depth, but does not cover the closing.

Truth Hits Everybody

The truth is that Comcast sucks.

I have, as you know, had my own issues and I had said, "From what I can tell the answer is that no matter what your problem is NO ONE CAN HELP YOU. It is like their corporate model is to be actively unhelpful." And apparently they suck no matter who you are. Check out Dave Barry's report about trying to get his TiVo hooked up to his cable. He says, "Bomcast needs to stop apologizing for the inconvenience, and start being less inconvenient."

Maybe YOU Should Be a Chartered Accountant

In case you read the last post and ended up wondering about the ExxonMobile financial statements (I probably just got down to about one reader pressing on past the first sentence, didn't I?), I have some links together from the 2004 Annual Report.

Balance Sheet - You can see at the top of Current Assets that Cash and Cash Equivalents have risen to $18.5 billion (yes, these statements are rounded to the million) from last year's $10.6 billion. Total shareholder's equity went up $11.8 billion or 13 percent.

Income Statement - Sales are up $54 billion or 22 percent over 2003 and if you compare 2004 to 2002 you see an increase of $90 billion or 45 percent. Of course, to paraphrase Jon Stewart, this may be because all of China decided to go out for a drive one afternoon (revenues from new markets vs. a change in prices). What points to prices being up is that costs are not keeping up with the rise in revenues (unless it is just soooo incredibly cheaper to do business in China). This has resulted in net income more than doubling from 2002 ($11 billion) to 2004 ($25 billion).

Cash Flow - Cash is the blood of a company, and how is this blood flowing? Net Cash from Operating Activities has just about doubled from 2002 ($21 billion) to 2004 ($40 billion). Investments in Additions to property, plant, and equipment has remained stable at around $12 billion per year for 2002 through 2004. Under Cash Flows from Financing Activities we find that dividends paid out to shareholders have increased much more modestly than revenues and income (from $6.2 billion in 2002 to $6.5 billion in 2003 and $6.9 billion in 2004) staying around a 5 percent increase per year. At the end of the cash flow it is revealed that the cash in hand at the end of 2002 was a little over $7 billion.

They are definitely saving for something. The question is - What?

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My post title comes from the fact that typing all of this up made me flash back to the Monty Python skit I watched this weekend.

Counselor (Cleese): Well I now have the results here of the interviews and the aptitude tests that you took last week, and from them we've built up a pretty clear picture of the sort of person that you are. And 1 think I can say, without fear of contradiction, that the ideal job for you is chartered accountancy.

Anchovy (Palin): But I am a chartered accountant!

Counselor (Cleese): Jolly good. Well back to the office with you then.

Don't Hate Us Because We're Evil

At lunch this week a friend asked me, "Do you believe what the oil industry is saying, that they need the profits they are creating because they have to reinvest it into rebuilding and oil refineries?" Although I'm not a fan of the oil and gas industry I told my friend that I couldn't make any assumptions about that until I looked at some financial statements to see what they were doing with retained earnings, etc.

So, I went to www.exxonmobile.com/corporate and among other things I found this cute flyer that included today's graphic. I just had to show you the chart because to me it is simply crying out, "Don't hate us! Look at who is eviler! LOOK AT THE BANKS! BIG PHARM! HATE THEM! HATE THEM!!"

Their opening statement on the flyer is:

"The oil and natural gas industry is probably the world's largest industry. Its revenues are large, but so are its costs of providing consumers with the energy they need. "

Hmmm, so let me see if I can use that education for which I'm still paying off student loans. You're saying that it is a high volume/low margin industry aren't you? In fact, you're bordering on whining that helping us get what we "need" is just about breaking your bank. *Sniff* Try not to notice *sniff* our executive bonuses *sniff* it's all about the children and what they neeeeeeed. (Insert picture of small child and cute puppy here. Snuggling a gas pump.)

Don't let that "high cost" (but high volume/low margin) whining get to you. You know what other high volume/low margin industry you may be familiar with? Bargain or "discount" retail. Because a few of the big boys kept it "all in the family" you see things like positions 4 through 8 on The Richest People In America (Forbes) occupied by the name Walton. Yes, 5 out of the 10 richest people in America make their money on high volume and low margins. If you go to the International list (The World's Billionaires) you get a couple of brothers who own Europe's biggest discount retail supermarket chain. The Albrechts (Karl and Theo) have slipped a bit because they used to kick the Walton's butts.

And may I just say that when you read the opening paragraph on that Billionaire's link, "The collective net worth of the world's 691 billionaires is $2.2 trillion, up $300 billion from the combined net worths of the 587 people listed last year," don't you have to ask yourself.... Why is there world hunger again?? I can think of a lot of useful things to do with $2.2 trillion dollars, how about you?

Where was I? Oh, right, oil industry. Reinvestment. So I reviewed the ExxonMobil 2004 financial statements on the theory that they were most of the industy and a good place to start. It's been a couple of hectic days since then but what I recall is that their earnings more than doubled from 2002 to 2004, as did their retained earnings and dividends. They do retain earnings and their payout of dividends agains earnings per share is something like 1.69 against 3.84 (but don't quote me) and they reflect reinvesting earnings in the statements.

What are they spending that money ON? Well, that's a good question now, isn't it? From what I could see I think that they redistribute overhead against the business functions so I couldn't easily see how to tease out things like EXECUTIVE COMPENSATION. I'm sure that multi-million dollar bonuses for the CEO can get lost in the "noise" of a multi-billion statement. Except that for me it doesn't. I have the same rule for business that I do for government - I don't mind paying for your service so long as you are prudent with the money. A lack of prudence puts my panties in a wad.

So what about executive compensation? According to this site:

ExxonMobil CEO Received $38 Million in Bonuses, Despite Soaring Oil Prices. According to the Associated Press, "Buoyed by high oil prices, Exxon Mobil Corp. had a record-breaking year in 2004 and chairman and chief executive Lee R. Raymond shared in the company's success with a $38 million compensation package Exxon said that Raymond, 66, was paid $7.5 million in salary and bonus plus restricted stock worth $28 million and nearly $2.6 million more in other compensation and incentives, according to Exxon's proxy filed Wednesday with the Securities and Exchange Commission." (AP, 4/13/05)

Although we see all these numbers flashing by all the time - millions, billions, trillions - let me point out that $38 million is equivalent to every man, woman and child in America sending him about 12 cents. Let's just round and say it's two-bits per four-person family. What in the hell did he do for me that was worth a nickel, much less two-bits? Can I fire him? Vote him off the island? Have the Three Ghosts visit him and scare him straight?

What I told my friend at lunch is that I have no problem with a company seeking rational profit. To me rational profit is that win-win balance of a symbiotic relationship between company and community. Basically nobody gets too screwed. Any year when two of the big headlines focus on (1) amazing profits for what is essentially a utility industry, and, (2) amazing increases in poverty, there is obviously something amiss. I think we have ventured into the land of irrational profit.
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Update 11/25/05
For more oil industry info check out Schroeder's post Bush petting session with Saudi prince.