Thursday, December 11, 2008

What's the Odds on a White Christmas?

So winter is here and the publishing marketplace is, as many guessed not immune to hard times. We now read daily of pay freezes, sales drops, bleak forecasts and profit warnings. There is a growing clampdown on acquisition of new content. How bleak will winter be depends a lot on those sackfull’s of returns which allows follow and the level of adjustment that has to be absorbed.

It is difficult to turn off the tap in publishing and many have said it’s like gambling in the nature of the spread betting and risk involved. When the chips have been placed and the Christmas wheel is in spin, it’s often too late to change the wager and we find everyone mesmerised by the bouncing ball, slowing wheel and on the lucky number and colour. A publisher only yesterday remarked he had to quickly get back to make a decision on a reprint of a title that was selling well so he could get more into the stores for Christmas. Gambling can be addictive!

What is certain this year, is that winnings and winners will be reduced.

Publishing is a long term investment where the monies are not recouped until many months after the investment , so stopping acquisitions just means that there could be a hole in the future, slowing down the schedule just means it takes longer to recoup the money and reducing the marketing spend can result in lack of visibility and impact on sales.
So where can monies be effectively saved? Converting fixed costs to variable costs and then focusing on their reduction and management makes sense, but the fixed costs are often just that and variable costs are often already tight. Much has been outsourced and shedding cost or turning off the tap is not easy. Royalties have to be paid and contracts honoured and encouraging more authors to find their own route may come home to bite.

Does digitisation have anything to offer other than more cost? Clearly the market is still very immature and sensitive and there are little sales revenues of substance for the vast majority of the market. Digital marketing offers much for all titles but requires additional investment. As governments have recently found out, the time to invest and fix the roof is not when it’s not raining.

There is one area where significant cost reduction can be achieved but it means changing the heart of publishing – the editorial and development process. This not only saves cost today but removes future costs, facilitates greater and cheaper exploitation of assets and could generate sales and revenues.

On the other hand many will believe that everything will soon be back to normal and this may just be one bad winter. So what are the odds on a white Christmas?

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