4,200 words, approximately 16 minutes to read
In a large market, is it better to seek a traditional publishing deal or self-publish to find your readers?
Those who build a business system that focuses on reader delight will dominate the Golden Age of Content Creation.
In this article, we will identify the publishing marketplace’s size and scope, how it works, your place within it, and of utmost importance — how to find your readers.
I’ll discuss a novel approach to thinking about publishing — a systems approach. I call this the Publishing Company 2.0 (PC2).
This idea differs from any approach you will read elsewhere.
Publishing Company 2.0 isn’t a process to land a trade pub deal, the latest direct digital marketing gambit to hack visibility, or a way to set up a balance sheet.
The system is derived from systems thinking, biology, economics, and behavioral psychology and is designed to sustain cumulative advantage.
I will share the paradigm shift that has created a Golden Age of Content Creation. Those that embrace this shift will ride the wave of change.
Let’s begin with scoping out the marketplace and identifying where and how it will grow over the next few years.
How big is the ocean you swim in?
The estimated size of the global publishing market was $92.8 billion in 2019. My research on growth shows conflicting data. Some projections are for the market to shrink in 2020 because of a COVID-related drop in demand, and another report projects industry growth of $23.7 billion between 2020-2024.
The disruption to print sales because of COVID-19 will have a lasting effect on the print book market. First, through its disruption of supply and second, highlighting to traditional publishers eBooks growth opportunities.
The reports I cite go to the top 50 publishing houses, and I’ve seen none of them have a comprehensive or up-to-date view of the market shifts you see in data from K-Lytics.
While K-Lytics doesn’t do long-term multi-year projects, the reports show short and medium-term trends.
K-Lytics reported in 2020 have shown a 25% growth in Kindle Unlimited payouts and increased sales of eBooks. There has been a continued shift from print books to eBooks and audio within the market’s overall development.
The rate of change varies from genre to genre.
In some genres, such as science fiction, fantasy, and LitRPG, audio accounts for 50% of an author’s revenues.
I have clients who have six-figure months with ebook sales and Kindle Unlimited reads and one selling six figures on the month of launch in audiobooks.
This should cause authors in some genres to pause and evaluate if they are just authors or multimedia content creators.
Is your ocean bigger when you factor in growing media opportunities that weren’t available a few years back?
What might be behind this growth?
Is this short-lived, and soon everyone will just be streaming video, leaving authors in the poorhouse?
I doubt it.
Customers are not monolithic, and there is a love of story, with the variety in how they consume the story. Will it be written, spoken, or acted out on screen?
Multiple meta trends show continued demand for story.
What market meta-trends tell us about the future.
Some trends are going to drive growth opportunities in content creation. The trends described below are long-term meta-trends, global population, and synergistic.
There will be more people on the planet. Regardless of education, geography, race, or religion, more people will be on earth in the future than there are now. With all things staying equal, there will just be more people seeking content.
Since 1970, the population of humans on the planet has doubled.
The overall growth rate slowed significantly to 1.08% in 2019. However it is now applied to a larger population.
As an aside, a crucial function of cumulative advantage is that the growth rate decreases as the stock population increases. Each round’s net addition grows, but as a percentage of the total, it’s smaller.
The infographic below shows population trends for the next one hundred years. I like studies that don’t talk in absolutes but give you a range of possibilities. The graph shows either a peak between nine and ten billion.
That’s a 24-28% increase in the world population.
Simply put, there will be more customers on the planet.
As emerging markets modernize and establish parity with first-world economies, we will see those markets adopt Western consumption behaviors. Putting aside any position you have on what that means for the world will cause a compounding effect in Asia, Pacific Rim, and Africa, where population growth and economic mobility are in play.
To put this into perspective, the average annual income in the United States is 9 at $65,000. India is ranked 68 with an average yearly income of $2,130, and China ranks 45th with $10,410. What happens as these countries increase wages and incomes rise?
One of the dominant influences will be rising education levels. Singapore is ranked 12th on the list of per capita income, with an average income of $59,590. This tiny island nation doesn’t even have a freshwater source.
The Singapore government has a deep understanding that the essential capital they have is human capital and has invested in education. The result is a prosperous economy built on knowledge. Education creates a positive feedback loop where there is wealth and focuses on education as education levels increase.
At its most basic, literacy increases as a culture value education more. We can see how this has played out over the last two-hundred-twenty years in worldwide literacy.
The tables have turned on this critical measurement. In the early 1800s, only 87% of the population was illiterate. In 2016, 13.7% of the world’s population was illiterate, but remember, there are way more people on the planet today than in 1800. Therefore, there are more illiterate people today than in 1800 (870 million) in 2016 (1.02 billion). Just as there are more illiterate people, there are far more literate ones. Reducing the illiteracy percentage will result in creating more potential customers.
We always want better for our children. Every generation looks to lift the next to a better standard of living. This results in an ongoing improvement in education. Over time, the number of literate people will continue to increase.
Increased leisure time
Another feature of a higher standard of living is more leisure time. This century will see more leisure time created through improved living standards and technology.
Consider how much reading and listening time will be created with auto-driving cars and increased automation.
We have already seen more people on the planet, and those people will be better educated. What is hard to quantify is how much of their time will be free for leisure. These factors will compound each other to create more opportunities to be captured by authors.
New media formats need stories.
Regardless of the format (eBook, audiobook, video, games), the underlying value is the story told.
The format is just a means for delivering that story and doing it in a way the customer desires. Audiobooks have been a great indicator of this phenomenon. Authors in genres where audiobooks have been successful have found that audiobooks’ introduction doesn’t cannibalize book sales. Instead, it is accretive.
When surveyed, the audiobook audience does not read regularly or has different reading consumption behavior. The story in audiobook form is consumed by a non-reading audience when it is impossible to read (driving, exercising). This also feeds into other meta trends like increased leisure time.
[tl;dr] The existing publishing market is 93 billion and growing. Meta trends in population, demographics, education, and technology suggest a larger opportunity for content creators in the coming decades.
In a large market, is it better to seek a traditional publishing deal or self-publish to find your readers?
There used to be a stigma with publishing as an indie. That time has passed.
This is a great quote from an author that has been in the game for decades. He is now earning a full-time living with over six figures in realties annually.
“Traditional publishing is, by and large, where people go to feel validated as a writer. Indie publishing is, by and large, where people go to make an income from their writing. Which you choose is largely based on whether you’re more interested in being told you are ‘good enough to be published’ by an ‘authority,’ or whether you want to make a living from your work.”
Kevin McLaughlin – USA Today Best-Selling Author
Kevin is right.
But there is more to the picture. As you read, you’ll see that I believe in a systems approach. I’ll discuss later how you can use a systems approach for your publishing business. Understanding the system goals and operating paradigm is key to developing a successful business.
I know this is getting a little esoteric but stick with me because if you’re operating within the same paradigm as a trad pub, then you’ll be doing things that way but without the scale. Let’s look at the Traditional publishing Paradigm and corporate goals.
The big five are big and driven by the profit motive. This isn’t meant to be a treatise on capitalism. Instead, it is unpacking the organization’s goals and drives.
Your publishing business and the biggest publicly traded company are the same. The investor sets the agenda for how the business operates.
If you don’t have a plan (like most small businesses), you’ve set the agenda to no agenda. This is worse than focusing on quarterly profits because you have no focus.
Think about the last meeting you were at with no agenda. Was time wasted? Did you get the most out of the resource committed to that meeting?
A company is no different.
Every publishing business, including yours, has to consider the investor’s needs. They are the owners and capital providers. If this is a big publicly traded company, then there is a need to produce quarterly results. If it is owned by private equity, then the owners also set significant financial requirements.
There is also another significant supplier of capital – Debt.
A good deal of large publishing companies has used debt to scale up. The industry has merged over the last few decades, and that debt burden has a seat at the table, sometimes the most significant seat.
A company saddled with massive interest payments leaves owners with little room to maneuver.
All of this is to say that the most prominent publishers are driven by the agenda of shareholders and investment obligations.
The top fifty publishers are big businesses ranging in revenues from Pearson at $4.8 billion a year to “smaller” publishers like Editora FTD, doing a $150 million in turnover.
Other publishers have lower turnovers, but we are characterizing traditional publishing.
Of course, it varies from publisher to publisher, but “Trad Pub” earns fifty percent of its revenue from medical, scientific, and educational material. Trade publication for fiction and general nonfiction is a small part of the business.
The large publishers that look to succeed in the fiction space seek the certainty of tried-and-true authors or apply a “risk management” portfolio approach to find the elusive breakout success that will make them a ton of money. As we will discuss later, the publisher is subject to the same whims the indie author faces – the arbiter of success is the open market.
The last word on the big publisher’s focus. You can see that there has been more money and time put into acquiring other publishers. The reason is that scale has merits, and buying companies is more straightforward than picking the next bestseller.
Like most globalized businesses, the focus isn’t on slow-growing markets like North America and Europe. Instead, these companies are positioning themselves for markets like China and India, where they see the most growth.
[tl;dr] while traditional publishers make up a significant amount of book sales, they are not focused on trade publications or acquiring talent to grow the business. These are big multinationals focused on delivering results to shareholders or servicing debt.
Success in the marketplace isn’t decided by a publisher.
Publishers get a bad rap for being gatekeepers or picking winners and losers. Any publisher with a profit motive has to make educated guesses on unproven authors and will always lean on proven properties. They aren’t trying to keep books out of the market. Publishers were trying to get the best books to call on the resources they had.
They were limiting what got to market and picking who they felt was a good bet. The driving factor was risk versus reward. The model requires them to take a significant upfront risk of investing in cover art and editing. With an advance payment, all the chances are front-loaded for a publisher. It is only when the book gets to market that the publisher sees if they will recover their investment.
Before we go further, let’s discuss the current market experiment that is the exact opposite of the gatekeeper fallacy. What I mean by the gatekeeper fallacy is some authors lie to themselves that they were unsuccessful because publishers and agents didn’t get how good they were. They weren’t successfully published author hob mobbing with Stephen King because they were being kept out.
Today there are no gates. New titles are flooding the market. In the last two years, the number of titles doubled with a publishing rate of over 3,000 a day.
Now there is no excuse for you can’t succeed, as no one is keeping your book out of the market.
Or is there an excuse…
The typical excuse I hear is that there are too many books and that it makes it hard for readers to find my book. If that is the paradigm you wish to run your business on, then you’ll never succeed.
I always wonder how serious authors are if they use this excuse or are unwilling to risk their own capital to test the market.
There is another paradigm. One that leads to success, but before share that, let’s get back to the trad pub paradigm.
In the traditional publishing paradigm, there are the middlemen — the agents.
These folks were another ring of gatekeepers. They were acting as submission filters, then pick some prospects based on what they thought acquisition editors were looking for now and in the future.
Agents have their own agendas.
They need to be seen as someone that delivers wonderful authors. The quality of the work they submit is tied to their reputation.
In this new era of the market, transparency agents have the most to lose.
Publishers can provide value through foreign rights and broader distribution, but when it comes to determining winners, they like everyone else can look to Amazon’s book rankings in the store to understand who is selling books and what genres are trending.
And that brings us to the market and how winners and losers are chosen.
[tl;dr] The big five publishers are focused on quarterly earnings, debt servicing, and growth through acquisition in Asia. They derive most of their revenue from textbook publishing, not fiction. As an unpublished author, you face two paths to market. Traditional publishing with agents and editors selecting books and has a corporate focus that isn’t aligned with your career or to risk your own capital and publish independently.
Cumulative advantage picks the winners and losers.
In Advantage, I unpack how and why a favored few get all the sales. Understand this isn’t a recent phenomenon in publishing. It has been part of the market since its inception, and it has been documented in numerous studies.
What’s different today is that the power-law curve that describes market sales is supercharged by the visibility of store rank and the modern market features that amplify cumulative advantage.
The other important feature is that cumulative advantage is agnostic to the publisher. It doesn’t matter if you are trad-published or self-published, the market will determine your success.
Study after study shows that the publishing market follows a power curve with a small percentage of titles earning most of the revenues. By looking at data related to the number of titles on Amazon compared to those capturing a sale a day, we can determine that only one percent of the titles on Amazon earn more than $2,000 a year.
With over 80,000 titles, a month is published. The market quickly sorts them out, and those that don’t garner an audience get relegated to the virtual bargain basement.
The important feature of cumulative advantage is that it’s a positive feedback loop. With each round of play (launch), you accumulate a larger audience that, if you hold on to them, are used in future rounds.
The problem for authors, like most businesses, is they focus too much on the customers they don’t have and never solidify their base.
They have no system to hold on to readers and make those readers identify with the brand.
In contrast, most authors adopt sales conversion tactics that, over time, will lose efficacy; trying to go viral may kill your business.
But I said I was going to show you how to find readers. How do I do that without selling them?
For this to make sense, you need to understand that it is within the market, you will connect with your audience. Ironically, as authors desperately seek ways to win customers, they adopt techniques that will create exactly the wrong types of connection.
If you find that your customers treat you like a transaction – You started it by treating them like one.
You need an entirely different paradigm in the 21st century.
Abandon the idea of a publisher carrying you on a palanquin to fame and fortune. This isn’t about you.
The winning paradigm is about your characters and story world becoming a popular icon across whatever media or sales platforms come your way. To do that, focus on the reader-writer relationship. If you focus on expressing your story world experience and making a connection between your characters and your readers, you’ll naturally attract readers.
It starts with understanding the reader-writer relationship.
This may be the most important concept you can grasp as an author.
Authors derive all money from the reader.
Sometimes we lose sight of this and think because our royalty deposits come from Amazon, Apple, or some publisher that they are the source of income, but they’re not. They’re friction, middlemen.
All the money you earn as an author comes out of the discretionary spending of a consumer.
Without a story, they have nothing to buy. Regardless of the form, the underlying story experience is what they are buying. The medium is just the preference of consumers.
When you embrace this symbiotic relationship with your readers and make it the primary focus of your business, your paradigm will shift.
No longer will you treat a potential reader like a transaction.
Those who build a business system focused on reader delight will dominate the Golden Age of Content Creation.
The most common obstacles to you building a business that leverages cumulative advantage
If readers can’t find you, then how will they ever read your books?
Today you have more cost-effective ways to find readers, but be careful the desire to grow your audience can result in getting the wrong audience.
Isn’t any audience better than none?
Yes and no…
You need readers, but you need the right PAYING readers
You can get free readers and discount readers easily, and then if you use that audience to seed a lookalike audience on Facebook, guess what they send you?
More freebie seekers and discount shoppers.
Make sure you don’t forsake quality for quantity. If your stock audience begets more like themselves, wouldn’t it be better to look for the perfect audience and let it build slower?
- Mistaking a marketing system for a business system
Early indie authors took their cues from direct digital marketers. Direct response marketing can be effective unless it’s overused, then people build immunity to the tactics.
The other issue is that we focus on the transaction. Everything is designed to get a buying decision on the seller’s timeframe. Those that don’t buy are kicked to the curb.
- Putting the transaction before the experience
Think about a brand or story world you love. It’s part of your identity, isn’t it? If you’re into Star Wars, Marvel, or Harry Potter, it has changed the person you are. It is part of how you think and navigates the world. While you may have bought a lot of stuff related to the brand, you never felt treated like a transaction. Instead, you willingly bought. Because you wanted to buy, not that you were being sold.
This is where authors can change how they market by a focus on the reader experience rather than closing a sale.
By creating a publishing company that is focused on building a brand that readers want to identify with and fostering a community that blurs your story world with reality, you set the stage for cumulative advantage.
With a system that indoctrinates new fans and gives them a way to engage with like-minded people and your story world, they will become a magnetic force for attracting new fans. But how do you build this type of publishing company?
Three steps to building your Publishing Company 2.0.
There is a lot more to this than these three steps, but I want you to have some ideas to work with and understand how this way of going to market is a paradigm shift. A shift that will set you apart from others and help you accumulate advantage.
- You have the freedom of not needing to grow for growth’s sake
This is a big one most overlooked. If I ask most authors what they want from a publishing business, they quote a number. They will say I want to make six figures, or if they make that, they say seven figures.
At those levels; you have all the money you likely need. You don’t have the constraint of quarterly dividends or stock price growth, so why are you trying to grow?
Figure out what your right growth rate is to meet your Investor Needs.
In most cases, you’ve never taken the time to put this into a written form and asked why you want that?
Of course, when you’re starting, there are simpler needs. As a new author, you need to get to break even. Nothing else matters, but are you managing your business to do that, or are you swinging for the fences?
Figure out what your business needs to be and grow at the right rate for you.
- Finding your audience
Think through who the idea audience is for your books. The better you understand the audience, the easier it will be for you to find more of them.. People like to be in groups like themselves. We are tribal. Your brand can be what defines a tribe. Don’t believe me, look at your local professional sports team.
- Know how to delight your tribe
The experience and community you develop around your brand becomes that ephemeral connection a reader has with your books. We enjoy reading a book, but we also enjoy talking about that book with others that are like-minded.
There is more to this process once you change an experience-based publishing company designed to create cumulative advantage. I go into detail as to the reasons and process in Advantage.
A word of warning: The book is dense with research and outlines not only how to go about building cumulative advantage but why it is so important. Don’t be surprised to see more and more authors abandoning digital marketing strategies for a more holistic approach.
This isn’t something that is hackable. While revolutionary in concept, it is evolutionary in design. You will create a business organism designed to thrive in the publishing marketplace. An organism that can thrive in any biome as long as there are readers in that environment.
One more thing before I wrap up.
There is one publicly traded company that gets this paradigm shift and is building an experience-based content company.
Disney is actively working on getting closer and direct with customers. It took them some time to get untangled from the old paradigm, but now that they are no longer beholden to cable company contracts, they are going all-in on eliminating the friction between them and their customers. If they can do it at that scale, you can build your own experience-based content company.
Why not follow in Disney’s footsteps or better yet forge the path with them?