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Few people care about supply chain problems in the industry until they are directly affected by them. This has been the key challenge facing Brian O’Leary, outgoing executive director of the Book Industry Study Group, since he took on the role 10 years ago.
The Book Industry Study Group is a trade organization that focuses on improving the supply chain, establishing and refining standards (such as BISAC codes), conducting research, and fostering a community that reflects all stakeholders in the industry. I joined the organization in 2018 because of the significant value of their events in helping me understand what’s happening inside the industry. My newsletter archive includes articles drawn from BISG presentations going back to 2016, covering topics as varied as best practices for ebook marketing, digital content in libraries, and challenges in the printing and paper market.
I first came to know O’Leary through his writing, some years before he took the helm of BISG; I repeatedly assigned his article Context, Not Container, co-authored with Hugh McGuire, in my publishing classes at University of Virginia. Later on, I met him in person at industry events like BookExpo, where I discovered a kindred spirit in how we see the business (although I cannot claim to be as interested in supply chain issues).
O’Leary is retiring from his role on June 30. I was delighted that he agreed to an interview to discuss ongoing issues affecting the industry. This conversation has been edited for length and clarity.
Jane Friedman: You’ve been in a position for so long where you see all sorts of practices and behaviors from publishers and organizations. And something I’ve noticed, the longer I’ve been around, is that a well-run business is maybe the exception rather than the rule. That’s not a knock on publishers; I think that’s true across industries. But when I look at publishers specifically, I see a lot of knowledge about what needs to be done, but maybe not the resources to do it, and I’m wondering if you see that as well.
Brian O’Leary: Several years ago I read Thinking, Fast and Slow, the Daniel Kahneman book, and it’s a tough read, but the core thing essentially is there’s so much stuff in the world that’s going on at any given time that we create shorthand and rules of thumb, go-to mechanisms. And I think book publishing, as a very long-established business, has a lot of rules of thumb. It’s really hard to break that when it’s ingrained in how you think. So I think your initial sense that book publishing is maybe not the most efficient or the most effective or the most forward-looking is in part a function of its success in the past. We’ve developed good rules of thumb.
The industry as a whole is struggling in part because, while we lament the consolidation of a lot of book publishing, it’s still a pretty fragmented business. The total business, depending on how you measure it, is $32 billion if you look at AAP numbers, $40 or $50 billion if you think about the retail business. I don’t know how much Apple has on its balance sheet right now, but it probably has $500 billion in cash, right? So you could buy the book business 10 times over, and that’s one company. [Editor’s note: If you add up cash on hand right now among Big Tech companies Google, Apple, Amazon, and Microsoft, it would be roughly $500 billion.]
You might have seen Michael Cairns’s piece that ran in Publishing Perspectives the other day. He’d given me an early look at it, and I couldn’t disagree with him, really. I mean, I struggle with my own organization. We have $700,000 a year, and maybe three-quarters of it goes to overhead expenses, salaries and benefits, paying for an attorney … the IT infrastructure for Zoom and everything else that we have to do. We’re not doing a lot of original research. I don’t think the industry is being unfair in giving us the money we do. I mean, I’d love more, but I’m trying to change the entire supply chain for $700,000 a year. I mean, it’s ambitious. I think any given publisher is in the same boat. They have their own priorities, but when you carve everything out and you still want to have a return to shareholders or a return to owner, there’s not a lot of room for expansive thinking about the future.
That is a problem we have to change. … New York magazine had a post [sub required] on [whether] nonfiction publishers are going to get creamed by AI. I’m not quite sure I buy it, but what are we doing to make sure that that’s not the case? I don’t think we have an industry perspective.
To bring it back to my tenure, one of the things I tried to do really hard was create collaboration across trade associations. I’ve given away ownership of good ideas because they’re better suited elsewhere. We’ve convened people just to get them to know each other and talk to each other, and I think that’s critically important. But the next step has to be And then what? I don’t think I’ve been able to get to the and then what. We’ve done some good things, but it’s not the critical mass that you’re asking about.
You brought up consolidation. There are so many entities blamed for publishers’ problems. Authors too blame certain companies—Amazon, Big Tech, Barnes & Noble, distributor consolidation, you know. I don’t know why that grates on me. Yes, they do present problems, and they’re not necessarily acting in publishers’ best interests, but it’s not satisfying to me to see publishers or authors say, “Well, if only Amazon or so-and-so would change their behavior.” Do you think publishers tend to have blind spots where they could be doing more work on themselves?
Yeah, for sure. I think this is true across the supply chain, across the industry. … People forget that the industry—as small as it is today relative to some of the big players—it was even smaller before there was a Barnes & Noble and a Borders, smaller than when there was an Amazon. Publishers early on were very happy to be able to go to one outlet—you know, when Barnes & Noble had perhaps 450 stores—to talk to one buyer and say, “Here’s some books that I want you to pay attention to.” They sold a lot more books as a result of consolidation, then realized that the consequence of that was in part sometimes that they were starving the ecosystem of smaller bookstores that had kept afloat for a long period of time. And there’s some corrective action, but sometimes it was like, “Well, the industry’s changing. I’m selling a lot of books.”
That was fine until Barnes & Noble and Borders and others said, “Well, you know, we’d like a better price. We’d like a discount that reflects some of the efficiencies that you’re obtaining just by selling to us. We’ve done work to build these stores.” Then it became a problem for publishers. And then Amazon comes along. …
But this cycle kind of repeats itself. When digital books were first introduced, I remember going to BookExpo in Los Angeles in 2008. Ebooks from Amazon, the Kindle, were about a year old. And Jeff Bezos came out on stage. It’s I think the only time in my memory that he went to BookExpo and brought Carolyn Reidy to talk about a partnership they’d established between Simon & Schuster and Amazon to digitize their backlist.
And I think everybody was excited because many more books were going to be available on a Kindle. And Simon & Schuster was thinking, “We’re not paying for this. This is great.”
How many months later—and the answer is 18—were Simon & Schuster and Amazon at odds over the price of ebooks? … That kind of—not necessarily short-term thinking—that not fully engaged thinking around what the industry needs to do to own its destiny shows up in lots of different places.
If you’re always making decisions based upon what’s good for you right now, you do run the risk of just putting yourself out of business. Other people disrupt you, and you don’t see it coming.
This raises a related issue for me with AI and how that will get reflected in metadata. I’m seeing platforms like Spotify and YouTube and others, they seem to be dealing more quickly with the pain of AI-generated content on their platforms. I can’t believe that Amazon is any less affected, but these other companies are creating verification for artist identities and better tools for identifying deepfakes. Obviously this helps them keep the platform more trustworthy. It helps consumers better understand what they’re engaging with. Do you expect something similar to happen for books? It seems like book publishing has been slow to adopt anything that would help verify the provenance of book content.
Part of that is the legacy of having been in print. So we feel like we can just pick up a physical object and look at it. Even that’s not good enough anymore because there’s plenty of print books on platforms like Amazon that are just totally made up. We’ve been trying to do some stuff around author identity, ISNI, which is more widely used in the music space than it is in book publishing. We have recommended best practices coming out in June.
ISNI is essentially verifying the contributor. It’s critically important in the music business because that’s how you get paid. The YouTubes and Spotifys have to have clear identity or else they can’t pay royalties. I mean, that’s a business that is scaled to an extent that book publishing can only kind of wave at by comparison.
We have to do a lot more. … It shouldn’t be competitive. If Amazon solves it, it maybe gives a temporary leg up to Amazon. But the reality is, any retailer that is perceived to have content that I buy and I can’t use is going to be at a loss. This is an industry problem, not a vendor problem. There are vendors who are better and worse at it.
One of the first cases I had in business school going back four and a half decades was essentially a marketing case about why doesn’t Burger King just trash McDonald’s food, or the converse? And the reality is that if you put a pox on the industry, if you don’t believe a retailer is reliable, then no retailer is reliable. Politics could learn this, honestly.
If we don’t solve the problems that bad actors place upon us using things like AI, then we’re going to be the people who suffer. The bad actors won’t suffer. They’ll find a new market or a new way to make money.
It’s interesting to me how people talk about book publishers having weathered the digital transition better than other forms of media, I guess specifically newspapers and magazines.
That they’ve preserved revenue. Yeah.
Do you think it’s true that they’ve done better, or does it have more to do with the uniqueness of the book itself rather than, like, the great prowess [laughs] of book publishers?
Well, I think book publishing had a long history, well beyond my career, of getting people to pay for a product. Maybe it wasn’t as much money as an author would like or even a publisher might want, but they had a market.
The problem with magazines and books for the most part—there are exceptions—but for most magazines, they charged too little. And they did it to grow an audience and to sell that audience to advertisers. And the real weakness was that when better advertising options came through the internet, a newspaper or a magazine became a second choice at best. At that point, it exposes the fact that they’d never really built a culture of people paying for the product.
So book publishing gets credit for having built a culture of people paying for a product. The problem is, it hasn’t really figured out digital at all. Just even the way that we did it, the transition from print alone or primarily print to print + digital, we borrowed all the metaphors that we had in place for physical products. We kept the distributors in place. We didn’t think about direct distribution very much at all. We kind of just picked up the existing vendor cycle. Maybe there are new players, so instead of Ingram, you have OverDrive, right? But we didn’t really think about What does the business model for digital do for us?
I wasn’t on the inside, and it’s not fair for me to assess, but I think some people, some publishers, were unhappy with digital for different reasons. Some because they thought it was frictionless and would enable libraries to do things they didn’t want them to do. Other times, they just didn’t like the format or felt like it was a threat to the hardcover model. So they actively resisted trying to promote it. A lot of the pricing that came out of the consent decree was fundamentally We’re pricing e-books higher, more like the price of a trade paperback in a lot of cases. And it’s essentially a license.
If I have a physical copy, I can give it to Jane Friedman, and Jane’s gonna say thank you and be happy about it, and it’s going to have multiple readers. You can’t do that with digital, so charging me the same price? People have caught on. And I think it’s fostered some of the library use. How we manage that is a digital question. What we’re trying to do is rate-limit the uptake, and I don’t think that’s going to work.
Do you think the subscription services pose a threat? I’m thinking specifically of audio, since that’s the growth area. But it could include ebooks too. Big publishers basically stay out of Kindle Unlimited.
Right.
But obviously they’re starting to be a little more open with Spotify.
I may be naive in this answer. If so, then somebody who reads your work will tell you. But I think anything that gets people to read is a good thing, right? Now, you have to find the right price for it, and that’s a question of understanding the deals, and that’s not something you and I usually get exposed to. I’m not unilaterally saying, “Yeah, everything should go subscription.” I don’t think it needs to. Much as I felt in 2008 and 2009 when ebooks were first coming on, you remember that was a period where publishers tried to window the release of ebooks.
Yes.
That failed miserably. Even the effort by Macmillan to try and window access to frontlist content for libraries encountered significant resistance. Although that’s more of a business-model conversation that I think probably deserves a better hearing than it got in 2019. But the windowing for ebooks for consumers I think was a failure because people want to read in the format that they value, whether it’s audiobooks, digital books, or physical content. And I think telling people that it’s not your time just feels like a mistake. I feel this way about subscription services too. If people feel like, “I want to read a lot,” and we’re saying, “Well, yeah, but you have to read our way. You have to buy each one individually,” I think it only encourages people to find other ways to entertain themselves.
I think the conversation needs to be How do we make money that way? How do we all make money that way?
You’ve said this in your writing, and I think it’s probably one of the most important things that you continue to say, which is you have to understand the business you’re in. You don’t have to be an expert at pricing, but you can’t just sort of say, “I only want to write,” or “I only want to publish, and what happens after that, you know, I’m not going to pay attention to.” That if you want to succeed in this business, you have to understand the business that you’re in.
It’s no longer really practical for anyone in this business to say, “I’m an editor, I’m a writer, I’m a supply chain executive. And I don’t understand the rest of the business. I don’t need to.” You do.
You mentioned that the provenance of content is one issue that BISG will tackle, or that you’re handing off to Allison Belan [the new executive director]. Is there anything else that will be important for the organization to handle in the next two to five years?
Yeah, I think we’re too slow. One thing I’ve learned both from this decade and from the industry as a whole is that problems persist far longer than they need to.
Amazon’s deadline was March to require publishers to supply metadata for digital products in ONIX 3.0. That’s 17 years from the time it was introduced, right? And the thing to keep in mind about something like ONIX is it’s not a mystical metadata standard. It’s how we translate a business problem into a solution. Somebody comes to EDItEUR [ONIX trade standards body] or to us and they say, “I want to be able to describe different business models for lending digital books in libraries. It costs this much for 26 times; it’s this much for unlimited use. I want to be able to do that for different types of books and different types of libraries.”
Well, that gets translated into metadata. That metadata is in ONIX 3.0. … We need to be able to describe a complex business in complex ways. Publishers want to be able to do things [like this], but they don’t want to invest in the infrastructure. And that dichotomy, honestly—I mean, I feel like I’m dumping on the industry—I didn’t understand that as well as I do today, when I started. I got sucked into an argument about, “Tell me how ONIX 3.0 is going to help me sell one more book.” It’s not provable.
The industry needs to move much faster. I spent a chunk of time early in my tenure, probably my first three or four years, I unabashedly said, “We’re the supply chain organization for the book business. We’re solving problems that affect two or more parts of the industry.” That was my elevator pitch.
Honestly, no one liked my elevator pitch because no one cares about supply chain. It’s the plumbing of the book business. But the reality is that you don’t care about your plumbing until the day it breaks, and then that’s all you care about, right? That’s all you talk about, and every time you see your friends and neighbors, you say, “Oh my god, this isn’t working.”
If people are bored by the topic, then they’re making themselves more and more vulnerable over time, and I think we do need to address that.
Do you expect to be involved in anything publishing-related after you step down, aside from your own writing or creative projects?
I would love to go back to writing. I used to write quite a bit for about five or six years, and I found the more I wrote, the less consulting work I got. [laughs] That convinced me that my points of view are not particularly commercial. … Allison has an opportunity to launch BISG to a new level and maybe in a different direction. If I can be helpful, I will be helpful. And if I can’t be helpful, I’m very happy being on the outside, because I want to see the industry and BISG succeed. And the last thing in the world you need is Brian O’Leary telling you how he did it 10 years ago.
Read O’Leary’s parting note, This Single Print of Time, at BISG’s website.
