DIGITAL DISTRIBUTION MODELS
Jennifer 8. Lee of Plympton
DISTRIBUTION. Format. Editorial. In publishing—as with almost all media—these three elements work in tandem to define the business models that allow creatives to be creative for a living. For over a century print publishing in the United States saw a robust equilibrium in which publishers, booksellers, authors, and readers struck a balance that both served their needs and established a fertile environment for a strong tradition of American literature.
But rewind to the mid-nineteenth century and we see a different story: American publishers were building their future empires by pirating British works. Meanwhile Canada was pirating works by writers from the United States (Mark Twain visited Ottawa in 1883, prior to the publication of Life on the Mississippi, to gain copyright in Canada). American writers started to suffer financially because they found it difficult to compete with the royaltyfree works from overseas. The storied authors we know today, like Herman Melville and Walt Whitman, paid to have their own books printed.
By the denouement of the nineteenth century, the rambunctious American publishing industry was tamed. The United States Congress entered into the International Copyright Act of 1891, effectively trading American publishers’ ability to pirate for the protection of American authors. Pioneered by George Palmer Putnam in 1846, the modern royalty system, in which authors were paid a fixed percentage of the sales price and publishers and writers thus shared financial risk, finally came into effect.
The tradition of American publishing is an iterative—and sometimes unsavory—experimentation to resolve tensions between writers, legal structures, revenue models, and technological innovation.
To its credit the royalty system survived numerous shifts in formats, including hardcovers, mass-market paperbacks, pulp dime novels, trade paperbacks, audiobooks, and, most recently, e-books. The system worked for publishers and authors as long as individual items—whether physical or digital—were bought by and sold to individual end users.
But digital publishing has thrust us into yet another period of experimentation. Specifically, with the opening up of new distribution mechanisms and new formats, the editorial element of publishing has shifted. Independent, digital-first publishing houses— Atavist, Byliner, Truly Adventurous, Serial Box, and my own literary studio, Plympton—have arrived on the scene (and some have already departed). Born digitally native, we variously emphasize shorter works, concurrent audio production, serialization, rights defined by language rather than by geography, and the potential for Hollywood adaptation (essentially nonexistent in the nineteenth century).
Another key shift in the digital publishing age, reflecting how distribution has changed, is the invention of alternatives to the dominant sales-based royalty system that forms the key pillar in author contracts. Instead contracts may now be based on revenue splits, whereby, for example, the writer and publisher split revenue fifty-fifty either before or after costs are recovered. Alternatively some contracts mimic the existing model for magazine and literary journal pieces: Writers are offered flat buyouts for a period of exclusivity, with carve-outs for the author’s own collections.
These revenue and flat-rate models are accompanied by an increasing need
for appropriate licensing, as the current emphasis on sales-based royalty systems in publishing contracts makes it more complicated for publishers to incorporate the licensing that digital platforms naturally demand. Sometimes what this amounts to, for the time being at least, are awkward attempts at grafting new systems onto the old, sales-based system. For example, although “Netflix for books”-style subscription services may look like monthly flat pricing to users, the services are often paying publishers for each copy read by their users. The odd by-product of this model is that many of these platforms profit when their readers read less.
In response, subscription platforms, such as Audible, Scribd, Amazon, and Medium, are commissioning or financing the creation of original, exclusive works for their platforms. Like independent digital publishers, they have found a sweet spot in emphasizing shorter works—novellas, short stories, and long-form articles— released individually or in the form of serials or themed collections. Shorter works appeal to smart-phone-trained attention spans and, from a contracting point of view, resemble magazine and literary journal publishing more than they do print book publishing.
Both public and research libraries are positioned on the front lines of this licensing-versus-sales juggling act, as they strive to balance their patrons’ needs with those of revenue-minded publishers. Public libraries in particular are frustrated by the limitations that traditional publishers have placed on e-books: single-use access, expiration dates, caps on total lends, and list prices upwards of seven times what consumers pay. These constraints are a defense mechanism against feared cannibalization: E-books never have to be replaced for wear and tear, and the ability to borrow books without stepping into physical libraries lowers the friction of accessing something for free.
We’re beginning to see more and more attempts to resolve the licensing quandaries characteristic of digital works. In July, Macmillan announced a hybrid windowing system, through which a single e-book can be sold to each library system in perpetuity at a discounted rate—reflecting libraries’ demand for copies that have perpetual access. Under this windowing system, additional copies aren’t available until later, which separates frontlist from midlist titles. The Digital Public Library of America (on whose board I serve) has been encouraging publishers to come up with more flexible models for the DPLA Exchange marketplace, including one that permits a fixed number of total lends, forty, but up to ten at any one time. This would allow for flexibility when demand for a particular title surges.
Inspired by our own conversations with libraries and authors, the literary studio I cofounded is working on a set of standard licenses through which works can be made available digitally to libraries and schools with multiuser access for a flat, modest fee. Since this work is being supported by Adam J. Goldstein, a technology entrepreneur and graduate of MIT, we are calling it the Goldstein License. One of the first collections we are publishing under this license is Did You Know?, a set of children’s science books designed to be translated for young readers around the world. We are partnering with the New York Public Library, Library for All, and Nabu.
However winding its path, publishing is steadfastly a craft. This remains true as our industry expands from physical to digital. Prose is a craft.
However winding its path, publishing is steadfastly a craft. This remains true as our industry expands from
physical to digital.
Cover art is a craft. The choice of paper and typeface is a craft. Dutiful care from publishers shows the reader that an author’s work is worth an investment of time.
And the business models are also a craft. As the next generation of independent publishers, our lodestar is to seek business models that allow writers to write for a living.
Twin surveys conducted by the Authors Guild in the United States and by the Society of Authors in the United Kingdom found that the median incomes for writers on both sides of the Atlantic have dropped 42 percent since 2009, largely a result of changes, large and small, wrought by the internet.
We seek to find writer-friendly business models, not only because we are often writers ourselves, but also because a society that doesn’t give the creative arts space to flourish is poorer in the long run.