Four Funerals and a Birthday

September 24, 2009

I was asked tonight by a friend the simple, “How’s it going?”

I’m generally in a positive mood and responded: “Times are still tough, but I remain optimistic about the future of publishing.”

It’s later now and I got to thinking:

There are still more deaths than births in the publishing business. And that can be depressing.

Let me explain.

Most days I hear from friends and colleagues that business is rotten. Either their income has shrunk to where it can only be found under a microscope, or they’ve been layed-off, or they’re about to be bought out, or…

I do not often hear from my  friends and collegues that business has suddenly turned north, and couldn’t be better.

I see in the financial pages much more gloom (with a smattering of what I call “false hope.”). Nothing to cheer me up there.

Tonight I got to thinking that in the world of life and death that we humans inhabit we’ve got ceremonies, finely-honed over the years, to celebrate birth and to help us all ease through the grief of death.

At the same time, I’ve always argued that businesses are just surrogates for families. Ever since Peter Drucker and his pals there’s been a tremendous effort to make it seem that businesses are merely scientific enterprises. I argue that they’re just dysfunctional families, writ large.

Therefore when a business fails there should be a “business funeral,” where we join together and mourn. When a dear friend is laid off after a 22-year career, there should be a similar ritual. But we have no established ceremonies for these things, and are each left to mourn singly and silently.

But likewise should there not be a celebration ritual upon the birth of a new business? OK, it’s called the “press event.” But it always lacks the structure and ceremony of a good old-fashioned religious ceremony.

I was imagining this evening the moment when my putative business wife caught me on my cell to announce that she’d had twins. “I’m going to name the first one ‘FaceBook,” she said. “And the other, gosh I don’t know why, I’m naming Twitter.”

I rushed to the hospital and looked down upon their faces, listening to their early twitters, and thought that somehow we’d given birth to kids with birth defects. Yet here they are, a few years later, and they’re the most popular kids in the world. Where can I celebrate??

We’ve been through some tough times and have no fine outlets to express either pain or joy. We must simply endure, and when times improve, celebrate in the old-fashioned ways we’ve always enjoyed.

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The Economy and the Future of Publishing

May 4, 2009

I’m not a trained economist, although I’ve worked as a businessman for some 30 years, and have closely followed economic issues for many years. I think it’s obvious to everyone that works in publishing that the economic situation worldwide (and particularly in the U.S.) has become the “double whammy” that’s causing huge distress for publishers of all shapes and sizes. I keep pondering how newspapers would be faring if we weren’t in a recession. Obviously the Internet is a huge challenge to their current situation and prospects, but just as obvious is that a robust economy would be mitigating a lot of the pain they’re suffering today.

I’m sure that most readers have noted that for every doom-and-gloom story that’s published are two more that take the tack: “Such and such economic indicator fell for the fifth straight month, but a glimmer of hope is appearing.”

And so observers of the economy essentially fall into two broad camps: it’s bad now and going to get worse before it get better, or, it’s bad now but we may have bottomed out.

I’m with the former, partially by temperament, but largely from experience and study. I sold every stock I was holding several years ago, somewhat prematurely, but as they say, “you can never time the top or the bottom.” So the collapse of the stock market cost me next to nothing.

On April 22nd the Wall Street Journal headlined an article: “IMF Says Recession Is Deepening.” As we all know, institutions like the International Monetary Fund gain little capital in making statements as gloomy as that. The article leads off with “The global economy is in the grips of a deepening recession that isn’t likely to turn around until sometime next year, the International Monetary Fund said on Wednesday. The IMF, which had been slow to apply the word to the current downturn, also released a new definition of global recession.”

The Canadian Globe & Mail headlined its report on the story “IMF sees ‘severe recession.” The lead paragraphs for that article are as follows:

The world is in its worst economic state in 60 years, and recovery will be slow and painful, the International Monetary Fund says in its newest global outlook.

“The global economy is in a severe recession inflicted by a massive financial crisis and an acute loss of confidence,” the World Economic Outlook begins, projecting a steep 1.3 per cent contraction of the global economy this year and a dismal 1.9 per cent expansion next year.

“This represents the deepest post-World War II recession by far.”

Not very encouraging.

So my advice to all publishers who read this blog is by all means retain your optimism, but PLEASE make sure you’ve got a worst case scenario in your planning. Without it you remain excessively vulnerable.

UPDATE: For a little levity, always appreciated when reporting on the economy, check out on today’s The Onion, “Nation Ready To Be Lied To About Economy Again.” Included is this gem:

The report estimated that 663,000 private and public sector jobs were lost in the month of March—a revealing statistic many people found shockingly blunt. Responding to the new information, an overwhelming majority of citizens said they believe that, during these extremely uncertain times, our leaders have a responsibility to come together, sit the American people down, and lie through their teeth about everything from misappropriations of taxpayer dollars to the severity of the credit crisis.

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Economics and the Future of Publishing

October 9, 2008

I read the news today, oh boy! A little less gloomy than earlier in the week, but another barrage of depressing madness. I found an article from a couple of days ago in The New York Times by Vikas Bajaj titled “Forget Logic; Fear Appears to Have Edge.” It begins: “The technical term for it is ‘negative feedback loop.’ The rest of us just call it a panic.” Yep, panic. As I write this the Dow, S&P and NASDAQ indices are all down between 35% and 38% from their 52-week highs.

In today’s Wall Street Journal there are several interesting items.

The first is titled “Housing Pain Gauge: Nearly 1 in 6 Owners ‘Under Water’,” meaning that nearly one in six U.S. homeowners owe more on a mortgage than the home is worth. Not good news. Authors James Hagerty and Ruth Simon generously state for us the obvious: “No longer having equity in their homes makes people feel less rich and thus less inclined to shop at the mall.”

Another one which really caught my eye is an article by Susan Carey and Paulo Prada called “Economy Takes Toll on Premium Airline Passengers.” Apparently British Airways first- and business-class traffic fell nearly 9% in September from a year earlier. This is far more serious than it may appear on the surface as, for example, Northwest Airlines admits that its elite frequent-flier members account for only 5% of its total passengers yet a full 25% of its revenue (we always suspected that’s why we get treated like bovines in cattle-class).

Which brings us to trying to get a handle on what the impact will be of the current economic crisis on the various publishing industries.

There needs first of all to be a division between advertising-supported media (primarily newspapers, magazines, radio and television) and non-advertising-supported media (primarily books, musical and visual recordings, and films exhibited in theaters).

I’ve often wondered what would be happening today to advertising-supported media if the economy weren’t in such a mess. How different would be the decline in ad dollars for newspapers, magazines, television and the like if we were in a booming economy? But sadly we appear to be heading into one of the worst economic messes since the 1930s, and as the articles referenced above make clear, the spill-over effect is strongly pronounced, in both obvious and unexpected ways.

Suffice it to say that if things were looking bad for newspapers over the summer, they’re looking ghastly today.

The traditional view of books, film, live entertainment and so on has been that they are relatively recession-proof, first of all because their unit cost has not traditionally been very high, and secondly based on the notion that even in a recession people need some form of recreation and amusement.

There’s a lot of research to be done to form a definitive case on this topic, but here are some datapoints. A 2003 article in Publishing Trends, quoting Bowker statistics, has good news and bad news about book pricing. Adjusted for inflation, hardcover fiction prices have sunk by 2% over the past 25 years, while nonfiction hardcovers dropped by 27%. On the other hand mass-market paperback prices have shot up by nearly 40% and juvenile titles soared by some 60%.

The article goes on to quote a 2002 piece by Christopher Dreher. “…what’s taken a huge bite out of America’s book budget is the rise of the trade paperback, those larger paperbacks of better quality that can now be found occupying prime real estate on tables at the front of bookstores. Since the 1980s, publishers have increasingly kept their backlist in trade paperback, and used this format to publish the paperback versions of books that don’t have a mass-market appeal or million-copy sales potential, such as more-literary or specialized titles,” Dreher writes. This format usually retails for 3 or 4 times what the equivalent mass-market paperback might, and can drive away cost-conscious buyers.

A January, 2008 entry on quotes data from an August 2006 study by the Bureau of Economic Analysis and concludes that during the 2001 recession “growth in books sales actually remained positive and then rebounded quickly to their historic growth rate.”

The study is actually an NEA study which quotes data from the U.S. Bureau of Economic Analysis. When you examine the whole chart a slightly different perspective emerges.


Yes, book sales did continue to grow and bounce back quickly. But “Recreation consumption spending” as a whole far outperformed books, as did “Nondurable toys & sport supplies” and “Video & audio goods.” Watch out flower shops: “Flowers, seeds, & potted plants” took the biggest hit in 2001!

However the book publishing industry did even better during the recession of 1991, as data from the noted industry statistician William S. Lofquist authoritatively demonstrates.

The book publishing industry is today a substantially different beast than it was in 1991 or even in 2001. New books can be found at a discount by everyone as a result of Amazon, Barnes & Noble and others. Used books are far more easily sourced than ever before, and the lowest prices discovered, through both Amazon and Barnes & Noble, and from more specialized online sellers like Audiobook sales had been exploding (although they’re down by nearly 27% this year — perhaps falling victim to podcasts).Even e-book sales seem finally to be gaining some traction (at prices generally lower than comparable paper versions).

As I was writing this entry today the Association of American Publishers (AAP) issued a press release stating that “Book sales tracked by the Association of American Publishers (AAP) …were down by 1.4 percent for the year.” Two comments. 1.4 percent is not much when you think about the calamity that we call the U.S. economy, and as I demonstrate in my article on book publishing, the AAP data misses a tremendous amount of publishing sales volume that takes place outside of the larger publishing houses.

Meanwhile, over on Bill Conerly’s Businomics Blog, an August 7th entry discusses a Wall Street Journal article and makes the observation:

“Hollywood has said that it’s recession proof, because in hard times people will seek escape from their worries by going to the movies. The Wall Street Journal (subscription required) reports a new study that found just the opposite — when times are tough, people skip the movie-popcorn-soda expense. Perhaps they watch a movie on broadcast television, or rent a DVD for a couple of bucks. So far this year, box office sales are down 3.27% from last year.”

The original article in the Wall Street Journal is a good read, with more data and insight. Author Lauren Schuker interviews Hal Vogel, a longtime media analyst (whose “Entertainment Industry Economics: A Guide for Financial Analysis” I reference frequently). Vogel points out that “‘the availability of …alternative forms of entertainment means that today’s economic slowdown could have more of a negative impact on the film business than previous times of economic turbulence.

“‘You can’t compare how this slowdown might affect the movie industry to previous recessions,'” says Mr. Vogel. “‘The industry still has a degree of recession resistance, but this time around there is all this new technology and all these new distractions for moviegoers — you didn’t have Web episodes and cable television and computer games coming out of your ears in the past.'”

I think that this point, as much as any other, will be a key factor why most forms of publishing are going to suffer worse through this recession than they have through any other.

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The Financial Crisis: An Interview with George Soros

May 25, 2008

I am not an economist (thank God), but have always been fascinated and perplexed by sudden changes in the economy and their secondary effects. I’ve just updated my article on “Current Economics and the Future of Publishing,” using my admittedly limited knowledge to make some modest observations on how the current economic crisis in the United States could impact the short- to mid-term future of publishing.

It’s no doubt more informative to read the observations of one of the world’s acknowledged (although of course, not unbiased) authorities on economics, George Soros, and you have the good fortune that a detailed interview from May, 2008 with Mr. Soros is available on The New York Review of Books website.

One quote from the interview (very much in keeping with my perspective): “…the situation is definitely much worse than is currently recognized. You have had a general disruption of the financial markets, much more pervasive than any we have had so far. And on top of it, you have the housing crisis, which is likely to get a lot worse than currently anticipated because markets do overshoot. They overshot on the upside and now they are going to overshoot on the downside.”

An excellent read…

The Strength of the Canadian Economy

September 15, 2007

The Canadian dollar, after many years trading as low as 62 cents on the American dollar, has now reached a point of near-parity: closing just above 97 cents yesterday.

In an article in the Globe and Mail, BMO Nesbitt Burns deputy chief economist Douglas Porter said “The latest run in the Loonie has been fuelled by $80 oil, $700 gold and $9 wheat,” Mr. Porter said. “Aside from lumber, newsprint and Celine Dion, practically everything Canada produces is now in piping hot demand.” (The “Loonie” is a Canadianism for the dollar itself, as Canada offers single dollars in the form of a gold-colored, bronze-plated coin bearing the image of the Loon, a bird strongly and romantically associated with Canada’s northern wilderness.)

Note that lumber and newsprint are among the few commodities not thriving, suffering in Canada as they are worldwide. Mr. Porter might also have mentioned that Canadian printing exports have dropped drastically in the last several years, victim both to the rapidly changing exchange rates and to increased competition from offshore, primarily China.

This site is not primarily concerned with world macro-economic issues. But the fundamental strength of the Canadian dollar, as much as it may cheer some nationalists and politicians, is not a boon to the future of printing and publishing in Canada.