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A Few Remarks About Books and Business
Sep. 30th, 2017 01:44 pmRecently, Nate over at The Digital Reader has been posting some really great summary posts about his take on the ebook transition. Here is one of them:
https://the-digital-reader.com/2017/09/28/new-book-people-wont-tell-will-always-publishers/
It is quite reminiscent of things I vaguely recall Konrath saying about how he wanted someone to do a bunch of the non-writing work of getting books to readers -- but not wanting to pay a fraction of the book's take going forward. He had some interesting ideas along these lines. I was happy to see that Passive Voice responded to Nate's post.
http://www.thepassivevoice.com/2017/09/what-the-new-book-people-wont-tell-you-there-will-always-be-publishers/
Not really a lot of disagreement there!
Last year, at Aeropostale's bankruptcy sale, a group of investors including Simon and GGP bought the stores and kept them going. This was a pretty straightforward case of landlords not really wanted to have yet another anchor store go bye-bye. Otherwise unsuccessful business models can be kept afloat if their creditors, including suppliers, and people who lease space to them, really, really, really don't want them to go under.
Keeping this in mind, I have some questions. BKS has been on death watch (expected to go to bankruptcy) for some time now -- long enough that sometimes people assembling lists of companies on death watch remark on how long BKS has been on these lists. Their stock price had a bit of a bump when they lost a little less than expected last holiday shopping season / fiscal year. But the slide continues, and while BKS still pays a substantial dividend (vs. their current share price), it is expected that won't continue forever, and I think most investors have some idea of where things go after a dividend gets cut.
Is BKS, like Aeropostale, being cut a little slack from the people who own the spaces it occupies? Is BKS on some form of life support from its suppliers, the big 5 publishing companies? Presumably (I don't know -- I haven't checked) there is a large variety of landlords involved. But the suppliers are comparatively small in number. What's keeping _them_ from going under?
Hachette is basically French. And the French book market has a lot of things going on with it other than dog-mange-chien market competition (support for French language and culture being an important function of the French government). I would expect that Hachette could continue along with status quo ante until the French book market has been as undermined by ebooks as the US book market -- and that could take a while.
Two of the big 5 US publishers are owned by German conglomerates. While the details are different and details do matter, the rough outcome is similar. The German book market has high barriers. Also, the Euro government has some real issues with rapid change in general and especially when wrought by US companies such as Amazon.
This leaves us with two. HarperCollins is an arm of NewsCorp, and Simon & Schuster is owned by CBS. Both are omni-channel media companies run by conservative (in every sense of the word) men who are hanging onto control of their respective companies as hard as they can manage. Things could change in a great big hurry if Murdoch or Redstone were not to wake up some morning -- one assumes that, since everyone else dies eventually, it will happen to them, too, but so far, not -- but I don't think anything will change in either company in a great big hurry before that day. All efforts to oust Redstone or reduce his control at CBS, for example, have led to massive court battles and no major changes, altho it has made for entertaining news stories along the way.
If you really want to know when radical change comes to the US book market, I don't think you should be sitting around wondering about business models and how many locations BKS has or even the details of the deal Randy Penguin worked out with its unions in the UK when it comes to redundancies. I think you should just read the obits every day, and when one or both of those names pop up, take a look around and watch carefully to see what happens next. I would expect substantial restructuring at both News Corp and CBS, and the knock on effects on the way people perceive the value of the rest of the big 5 are not easy for me to predict, but pretty likely to be substantial. More importantly, the money currently draining out to support BKS could conceivably be stopped by the heirs.
ETA: Upon further reflection, I also expect, possibly before obits, but definitely after, further consolidation of the big 5.
https://the-digital-reader.com/2017/09/28/new-book-people-wont-tell-will-always-publishers/
It is quite reminiscent of things I vaguely recall Konrath saying about how he wanted someone to do a bunch of the non-writing work of getting books to readers -- but not wanting to pay a fraction of the book's take going forward. He had some interesting ideas along these lines. I was happy to see that Passive Voice responded to Nate's post.
http://www.thepassivevoice.com/2017/09/what-the-new-book-people-wont-tell-you-there-will-always-be-publishers/
Not really a lot of disagreement there!
Last year, at Aeropostale's bankruptcy sale, a group of investors including Simon and GGP bought the stores and kept them going. This was a pretty straightforward case of landlords not really wanted to have yet another anchor store go bye-bye. Otherwise unsuccessful business models can be kept afloat if their creditors, including suppliers, and people who lease space to them, really, really, really don't want them to go under.
Keeping this in mind, I have some questions. BKS has been on death watch (expected to go to bankruptcy) for some time now -- long enough that sometimes people assembling lists of companies on death watch remark on how long BKS has been on these lists. Their stock price had a bit of a bump when they lost a little less than expected last holiday shopping season / fiscal year. But the slide continues, and while BKS still pays a substantial dividend (vs. their current share price), it is expected that won't continue forever, and I think most investors have some idea of where things go after a dividend gets cut.
Is BKS, like Aeropostale, being cut a little slack from the people who own the spaces it occupies? Is BKS on some form of life support from its suppliers, the big 5 publishing companies? Presumably (I don't know -- I haven't checked) there is a large variety of landlords involved. But the suppliers are comparatively small in number. What's keeping _them_ from going under?
Hachette is basically French. And the French book market has a lot of things going on with it other than dog-mange-chien market competition (support for French language and culture being an important function of the French government). I would expect that Hachette could continue along with status quo ante until the French book market has been as undermined by ebooks as the US book market -- and that could take a while.
Two of the big 5 US publishers are owned by German conglomerates. While the details are different and details do matter, the rough outcome is similar. The German book market has high barriers. Also, the Euro government has some real issues with rapid change in general and especially when wrought by US companies such as Amazon.
This leaves us with two. HarperCollins is an arm of NewsCorp, and Simon & Schuster is owned by CBS. Both are omni-channel media companies run by conservative (in every sense of the word) men who are hanging onto control of their respective companies as hard as they can manage. Things could change in a great big hurry if Murdoch or Redstone were not to wake up some morning -- one assumes that, since everyone else dies eventually, it will happen to them, too, but so far, not -- but I don't think anything will change in either company in a great big hurry before that day. All efforts to oust Redstone or reduce his control at CBS, for example, have led to massive court battles and no major changes, altho it has made for entertaining news stories along the way.
If you really want to know when radical change comes to the US book market, I don't think you should be sitting around wondering about business models and how many locations BKS has or even the details of the deal Randy Penguin worked out with its unions in the UK when it comes to redundancies. I think you should just read the obits every day, and when one or both of those names pop up, take a look around and watch carefully to see what happens next. I would expect substantial restructuring at both News Corp and CBS, and the knock on effects on the way people perceive the value of the rest of the big 5 are not easy for me to predict, but pretty likely to be substantial. More importantly, the money currently draining out to support BKS could conceivably be stopped by the heirs.
ETA: Upon further reflection, I also expect, possibly before obits, but definitely after, further consolidation of the big 5.