Should the “free market” determine publishing?

This thinking “out loud” on the nature and future of book publishing vis-à-vis the free market may drag into two blog entries, as the subject is complex. I apologize ahead of time to both of my readers.

Salon recently had a blog entry calling for government intervention in publishing under the aegis of protecting culture, by Scott Timberg. Scott has some very valid points and, as is my wont, I feel compelled to comment. It is, after all, a subject near and dear to writers and independent publishers.

The United States has a fanatical religious belief in the free market system, despite the fact that we have no real free markets and the financial crisis of 2008 was in no small part created by freer markets. I know many of my libertarian friends cringe at the thought of the government being involved in anything other than defense and infrastructure. However, even Alan Greenspan, one of the most powerful disciples of Ayn Rand, the icon of libertarianism admits he was wrong in thinking that the invisible hand would work. As a side, snarky, note I would mention that Ayn Rand in her later/last years signed up for Social Security and Medicare.She was also a vocal homophobe, called Arabs savages, and felt there was no moral issue with taking the land from Native Americans. But, I digress.

A truly free market would have no protections against monopolies and monopolistic actions. It was a Republican President, Theodore Roosevelt, who put in place most of the Trust Busting legislation and created the Department of Commerce and Labor. Under his leadership, 44 suits were filed against monopolies.

Rural electricity, telephone service, and paved roads are all due to government regulation. Not only that, they exist due to redistribution. Generally speaking, for every dollar of taxes collected in a rural area, that area receives 1.5 dollars in benefits. No free market there, yet we accept the need for these sorts of redistributions.

Hurricanes Sandy and Katrina also reminds us that redistribution of funds are important for the nation as a whole.

Anyone with a credit card,if they think about it, enjoys the protection of government regulation.

But, what about culture? Does that require special protections? Who can forget the Big Bird debate in the presidential debates? Does publishing fall under the same area? Should we let the “free market” determine what is published, how many publishers exist, and which authors get published? Where does culture fit in the free market religion of the United States?

If you are a sports fan, you accept government protections. Baseball and football have special protections as monopolies, they generally receive public funding, huge public funding in fact. A pure libertarian would argue against it, but most supposedly free market Americans either put up with it, or embrace it. There is sometimes an argument that this makes economic sense, but that has been disproved time and time again. It is also, to be honest, a pure government “picking winners and losers” to pull from the presidential debates again. We, as a society, pick winners and losers with the government every single day and don’t object to it (remember the earlier comment on rural power, telephone, Internet service, roads, etc.).

Sports are part of our culture. What about books? Scott Timberg correctly points to the technology of book publishing as one of the major factors pushing the remaining publishers to merge. The other is Amazon, which I have commented on in the past. Doesn’t easy, cheap, publishing by anyone open up the free market? Don’t we all believe in the free market as the best way to do something?

In a word, No. I already gave a number of examples where the free market is ignored and we embrace it. Is patent protection free market, or interference? When does that protection stop making sense? Should “one click checkout” be patent protected, as Amazon claimed years ago?

Is it good for every single author on the planet to be published? Should every single person who wants to sell food be allowed to, without health inspections? Seems like interference in the free market. Let people die of food poisoning and the free market will shut the person down (until they open a new shop, under a new name). Yes, I know, that is over the top. That is talking about health, not culture. Culture has nothing to do with health.

Does it?

Stealing directly from Timberg’s article:

These developments all come just a few months after the Department of Justice decision that ruled in favor of Amazon and against five publishers and Apple, whom it accused of colluding to fix prices for e-books. On the surface, this ruling keeps prices lower. But as media watcher David Carr wrote in the New York Times after the April ruling, there’s a high cost paid for the low prices. The DoJ, he argues, went after the wrong monopoly, since Amazon controls somewhere between 60 and 80 percent of the e-book market (and controlled roughly 90 percent in 2010). “That’s the modern equivalent of taking on Standard Oil,” he wrote, “but breaking up Ed’s Gas ’N’ Groceries on Route 19 instead.”

Blocking the publishers from setting prices seems, at first, like a victory for the customer.

“But pull back a few thousand feet,” Carr writes, “and take a broader look at the interests of consumers. From the very beginning and with increasingly regularity, Amazon has used its market power to bully and dictate. It leaned on the Independent Publishers Group in recent months for better terms and when those negotiations didn’t work out, Amazon simply removed the company’s almost 5,000 e-books from its virtual shelves. The Seattle Times just published a series with examples of how Amazon uses its scale not only to keep its prices low, but also to keep its competitors at bay.”

Free market does not always mean good things for the consumer.

But, one woman’s culture is another ones garbage. Who picks culture?

Publishers do, sort of. Seven out of ten books lose money. Publishers are saying this SHOULD be good. This SHOULD be popular. Amazon (and other self publishing organizations) says, “I don’t care if this makes money, for the author, if I aggregate it with a million more, I make money. If this is all I present to the consumer they have to accept it.” Really, ironically, hyper-competition reduces quality innovation. Really good books, well edited, well screened, will end up costing more, not less.  Think about this like a startup. Startups have a good idea and pitch the concept. The concept gets angel investing. Angel investors know that 9 out of 10 of their investments will fail, but take a chance on the hope of big pay offs on the 1.  Venture capitalists step in and pick “winners” out of those that already made the angel investment round. Venture capitalists also have a rather hit or miss record on choosing winners. Bain Capital and Mitt Romney, for instance, had a much worse record in choosing successful companies than the U.S. government, despite the rhetoric in the debates on this.

With less and less publishers surviving, this is like less and less venture capitalists. It is a free for all at the lowest levels. Amazon is a marketplace. It makes it easy to participate in the market place, but it is nothing more than a marketplace. It makes money on transactions, fundamentally. Why should Amazon care if the book is good, or bad? (Actually, it should and it is starting too, but that is part of a long, long, term strategy, more on that another day).

Small publishers are more like angel investors. We know that 9 out of 10 of our titles will not make it big, but we are willing to risk time/money making all ten of them better and hoping the public agrees with one out of the ten.

Back to funding culture. To steal again from Timberg:

This could all lead to a silver lining for some parties: Lean, mean presses with focused missions – Graywolf, Seven Stories, Milkweed, New Directions – could do OK as publishing shrinks and six majors becomes three. “Poetry, translation, literary,” Silverberg says of the kind of boutique presses that could thrive. “They know their audiences better than they ever have.”

As wonderful as these presses are, they tend to give very small or nonexistent advances. Much of their funds come from philanthropy, the NEA and state or local arts agencies, and that money rises or falls with political leadership, tax codes and other variables.

Small focused presses get some trickle of money from federal, state, and local arts agencies. Not much and only a few of  them (the presses) get even that little. And, there is no protection, for example, on prices, or access to markets.Not really. Amazon could say, overnight, all publishers of more than 10 books must pay an access fee. Boom.

Europe does much to protect culture and Germany, in particular, does much to protect the book business as a whole, creating more diversity that actually makes a living.

Unfortunately, in the U.S, I tend to agree with Ira Silverberg, a veteran editor and agent now serving as director of literature for the National Endowment for the Arts.“I think we’re beyond cultural policy at this point, because capitalism trumped it. There’s not even a battle to be fought there.”

He later goes on to say, “It’s five or 10 years until we’ll know what the industry is going to be.”

I actually think it may be as little as 2 to 5 years.

If funding culture in the U.S. is a non-starter, I do wonder how much Europe and China will begin to influence the culture here. After all, if well edited, carefully chosen books all come out of Europe, than than maybe it is no surprise that Harry Potter and 50 Shades and Dragon Tattoo didn’t originate here, in the U.S. I don’t know if this is bad, or good, but I know I will miss the quality of diversity in culture, if the trend continues. By quality, I don’t mean the quality of writers, I mean the quality of books, which is a different thing—no matter what the format (eBook, print, audio).

Most of the quotes in this blog were taken from the fore mentioned Timberg/Salon article and it is well worth reading that in its entirety.