This is a time publishers ought to be investing and exploring new territory vs. laying people off and hunkering down. So why are so few of the big companies doing that?
Your guess is as good as mine.
I. In which I offer publishing executives my sympathy before criticizing them
One of the main reasons I love being a literary agent is that unlike publishing executives, agents—even business owners like me and Kent—don’t have to make many wrenching financial decisions on the job.
What I mean is that I can fall in love with books and fight for authors without having to put together a P and L sheet and assign limited numeric value to their “worth.” I can also make spending decisions with Kent without worrying about how many fractions of a percent they’ll knock off Neon’s bottom-line growth in Q4.
I don’t have to worry about making many bad financial investments at all, let alone justifying those investments to any bosses. With clients, the only “bad investments” I occasionally have to deal with are of my time, expertise, and feelings.
Don’t get me wrong: Kent and I are ambitious for Neon. We’re ambitious in the sense that we want to continue offering industry-leading representation and increase Neon’s gravitational pull on industry norms and attention as the years go on. In terms of our finances, however, we’re free to measure our company’s success in our clients’—and we do. We always will.
My in-house colleagues don’t have the same luxury, and I don’t envy them for it. (My self-employed ass does envy their 401k matching, but, you know. A mixed bag for us all.)
Editors and imprint executives must choose whether and how to invest their company’s finite funds. If they make the wrong calls, they often lose their jobs. They have to think in depth about things like supply-chain costs, inflation, shareholder value, top lines, bottom lines, measurable year-on-year growth, and ROI. They’re tasked—on pain of job loss—with eking out a modest profit in an unpredictable industry with capricious consumer trends and tiny margins for error. Oh, and: if the really senior people fail to deliver that profit, they’re not the only ones who get laid off; sometimes the higher-ups close their entire imprint.
My adrenal glands are pickling in their own cortisol just thinking about having that much high-stakes responsibility around win-lose, adversarial, uncertain decision-marking. I’m a people-pleaser. I’m so rejection sensitive that I get a little hurt when the NPC villagers ask to leave my island in “Animal Crossing,” for fuck’s sake. And they’re all programmed to do that after a while!! And you’re free to tell them they can’t leave!!
This is all to say that I love any of you reading this who happen to be publishing executives. (PS: hello.) I’m about to express some exasperation with The Way Things Are Generally Being Run Right Now, but it’s not because I think any of you are making stupid decisions individually. Just that we’re all kind of cogs in what is at present a bit of a stupidity machine, financially speaking.
I think it’s on each of us cogs to do whatever is within our limited power to, you know, shift the essential function of the overall machine back to a slightly less stupid place. That’s what I’m trying to do with this week’s newsletter—just float some ideas. I worry that my authors’ bottom lines might soon be affected by publishers’ ongoing, misguided attempts to shore up theirs.
II. In which I acknowledge that by most industry metrics and for most publishers, this has been a solid sales and dismal earnings year
For example:
While Penguin Random House’s global sales went up last year, increased and inflating costs of business caused their overall earnings to decrease by 11%. (There was also the wee problem that as of the end of last November, they owed a $200 million termination fee to Paramount Global as well as presumably millions in legal fees as a consequence of their failed bid to buy Simon & Schuster. This doubly sucks for PRH because because S & S is pretty much the only major publisher nailing its financial choreo right now, thanks in no small part to Colleen Hoover.)
So far this year, PRH’s sales are up again—9.5% higher in the first half of 2023 than that of 2022—but earnings have once again failed to keep pace. At least they’re not in the red anymore; PRH reported 1 million Euros of additional earnings in the first half of 2023 compared to 2022. But for a company as large as PRH, 1 million Euros worldwide is not a lot of money at all.
HarperCollins, meanwhile, announced at the end of last year their intention to lay off 5% of their North American workforce. They’ve been in the process of executing on that plan on and off all year; their year-on-year earnings are still in the red.
Ditto Hachette: higher sales, at least by Q3; tanking earnings.
Finally, if you’re curious about Macmillan: LOL, JOIN THE CLUB. This one’s owned by Holtzbrinck, a private company owned by a single German family, and therefore has no obligation to make public financial disclosures. That said, given what their erstwhile US CEO, John Sargent, wrote in his recent memoir about his abrupt 2020 departure, hinting that he was forced out for pushing back against proposed pre-pandemic cost-cutting measures, chances are good that their balance sheets look about the same if not worse than PRH, Harper, and Hachette’s.
III. In which I examine how most of the industry has responded to these challenges
By doubling down on support for their people, minimizing turnover, cultivating entrepreneurialism, channeling resources and trust to experienced midlevel leaders, thinking boldly and expansively about how to increase top-line revenue to compensate for increased costs, and generally building a long-term success cathedral, of course!
AHAHAHAHAHAHAHAHAHAHAHAHAHAHHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAH
AHAHAHAHAHAHAHAHAHAHAHAHA
AHAHAHAHAHAHAHAH
AHAHAHA
:sniff: No, just kidding.
How do you think they’ve responded, silly? By squeezing employees and authors for all they’ve got in return for like .2 drops of additional shareholder earnings juice, that’s how:
HarperCollins pledged at the end of 2022 to eliminate 5% of its North American workforce. They also instituted a hiring freeze.
Penguin Random House enacted sweeping layoffs and buyouts this summer, eliminating much of its editorial old guard.
Hachette is also dangling buyouts at employees.
Overall—according to PublishersMarketplace’s publisher-reported and therefore only vaguely reliable data—major publishers have been making fewer new book deals this year than they were last year, especially in the nonfiction and children’s markets. New book deals in fiction are still percolating along at record levels, although the record levels haven’t increased much since last year.
Yes, and: PublishersMarketplace has also seen an uptick in reported major deals ($500,000 plus), meaning one of two things: publishers are making more of those relative to the overall number of deals they do, or publishers are disclosing more of them, presumably to let agents and authors know that they’re ready to splash out on the right frontlist titles.
TL DR: your standard Reagan-era shareholder value theory-adjacent management kabuki.
IV. In which I lament the psychic toll all of this has taken on many authors and publishing employees
Laid-off publishing people have it the hardest, of course, but so do:
The in-house colleagues left behind after layoffs, many of whom have been tasked with taking on 1-3 departed coworkers’ jobs in addition to their own—while also largely not getting any substantive pay increases or promotions
The people in the above category who’ve successfully annihilated themselves in order to continue kicking ass…only to receive little to no recognition from higher-ups, who tell them “ok, ok, great start, now keep squeezing”
The authors who have to deal with the emotional fallout of this in the form of editor/publicist/marketer turnover—and/or severe burnout, which makes its sufferers less reliable, less responsive, shorter-fused, more illness- and injury-prone, and in general either much slower—or if not slower, much less good—at their jobs
The people in the above category who’ve been so stressed out for so long by their interactions with their publishing team that they’ve begun to experience severe burnout and depression themselves, both of which ain’t real helpful when you’re promoting a new book
Authors whose prospects on commercial submission would have been dicey pre-pandemic if briefly solid in the sales boom of 2020-2022—perhaps due to modest national sales potential, middling platform, or good-but-not-mindblowing craft. Submissions in this category are highly unlikely to sell in 2023.
All of us who aren’t Colleen Hoover, Colleen Hoover’s publisher(s), or Colleen Hoover’s agent
V. In which I point out that none of this is conducive to anyone’s thriving, including investors’—and I fear it’ll send the affected publishing companies into death spirals if they don’t course-correct soon
I hope I’m wrong about this! I mean, I don’t have an MBA! I’m not a business growth expert!
What I do know is that every time I’ve tried to explain what’s happening in this industry to my sister, who does have an MBA and is an expert on business growth, she’s made restrained noises of alarm. Because taken together, this whole :gestures at the landscape: sure looks like a bunch of companies hitting their bottom line through cost-cutting and layoffs while neglecting to innovate on meaningful top-line growth.
It sure looks like they’re failing to internalize the takeaways from literally every time anyone EVER EVERYWHERE on the PLANET has tried to extract more juice from an underwhelming fruit crop by building bigger, scarier, more aggressive juicers vs. investing in richer soil and better growing conditions so there’s juicier and more juiceable fucking fruit available for juicing in the first place.
It sure looks like a classic red-ocean scenario—one in which companies are tearing themselves and each other to bits in competition to get just a few known big fish vs. doing the sane thing and going off to find less crowded fishing grounds.
It sure looks like they’ve forgotten what happened to Kodak, Sears, America’s local newspapers, and literally every organization or geopolitical empire that has EVER EXISTED, HELLO, when they made life materially unaffordable for the people at the bottom and psychologically untenable for everyone in the middle and generally forgot that there is no value anywhere for anyone unless there’s also a population of people ready and willing to maintain and care for it.