0:00
You ever wonder how the book publishing industry works?
Search this video
0:01
Like printing, advances, how does the CEO of a top five publishing house even think?
0:06
Well, that's what this episode's all about and my guest is John Yaged.
0:09
He runs McMillan, which is one of the top five publishing houses.
0:13
And I said, "Look, talk to me like I'm a young writer.
0:15
I've never published a book before.
0:17
I'm a little bit intimidated by this industry, but I want you to be rigorous and sophisticated with me. Give it to me straight."
0:23
And so, that's what we did.
0:25
We just talked about all parts of the book industry.
0:26
And if you're interested in improving your writing, that's why you're checking out How I Write.
0:30
Well, check out another episode.
0:32
But if you're like, "I want to be a super successful writer and I want to understand how this industry works."
0:38
[music] Well, then you're going to like this episode.
0:42
You wouldn't believe it, but How I Write costs a fortune to run and it's thanks to Mercury that I can even do it.
0:47
They're the sponsor of this episode and a banking platform that I've been using for the past four years to run my own business.
0:52
When I started How I Write, I expected finances to be an absolute nightmare.
0:57
I got team members in four different countries.
0:59
I had things to think about like currency exchange and taxes and expenses.
1:02
And I was just dreading it.
1:05
But Honestly, banking has maybe been the easiest part.
1:09
I can't remember running into a single problem and it's because I've been using Mercury.
1:14
I switched over from other more traditional banks because Mercury is so well designed.
1:19
It's easy to get started.
1:22
It's easy to use while also feeling totally legit and secure.
1:26
>> [music] >> And Mercury gives me all the tools to run a global company like virtual cards, unlimited users, and the ability to customize each user's access level to exactly what they should see. And you know what?
1:37
If anything goes wrong, if I have any sort of challenge, I can always talk to their support team, which is super responsive and actually helpful, which is pretty rare these days.
1:45
And all that is why I can't imagine banking any other way.
1:50
Mercury is a fintech company, not an FDIC insured bank.
1:52
Banking services provided by Choice Financial Group and Column and A, members FDIC. All right. Back to the episode.
2:01
Well, why don't we start here?
2:01
There's been so much consolidation in the publishing industry, I don't know, going back 20 years.
2:07
I mean, even I was looking at this chart of Penguin Random House and how it became Penguin Random House.
2:12
And it I I swear it's like 45 different companies Right.
2:15
that consolidated into one.
2:16
So, how does consolidation impact the book publishing industry and who makes the money and then the kinds of content the kinds of books that are published?
2:29
I think the ultimate goal on consolidation is to get scale so you can deliver, you know, the same kind of results with more profitability.
2:34
Um the the trade-off is a lot of times is you get uh combinations of of businesses that maybe overlap, that maybe some get more more attention than others.
2:47
And I think more often than not, you sort of lose a little bit along the way because 1 + 1 doesn't equal two anymore.
2:55
1 + 1 equals something less than two.
2:57
Hm, that's in my experience what happens with consolidation in terms of the output, in terms of the books that are entering the world.
3:03
In terms of the financials, I think it depends on how you execute it.
3:06
But the ultimate goal is how do you get scale because we're a a relatively small margin business and there's more and more pressures on on the cost side of our business over the last, you know, several decades.
3:15
So, consolidation is a is an attempt to grab back some of that value chain for the publishers.
3:21
And those pressures are coming from where?
3:22
A lot of those pressures are coming from retailers getting more discount, big retailers asking for more discount, uh retailers asking for more, you know, assistance with promotions, authors uh commanding more more advances, and then, you know, freight, salaries, printing costs going up.
3:40
And why are those other people getting power relative to the book publishers?
3:46
Uh Amazon got pretty big. Hm.
3:48
>> You know, Barnes & Noble's the last, you know, sort of traditional retailer left standing outside of the independents and the mass accounts still control their their shelf space. Yeah.
3:58
>> So, it's leverage, right?
3:58
It's the old It's the old story about leverage. Right.
4:01
And um it seems to me like there has been a bigger push for celebrity books. Is that true?
4:09
You know, I I get this question a lot and I haven't sat down to do the the math and say, are we doing more celebrity books than we used to?
4:14
I'll say it this way, they're definitely more visible and I think they're working at a when they work, they're working at a higher level, but there's also a lot more risk because of that because the the the cost to get them is is a lot more.
4:27
So, I can't tell you off the top of my head, yeah, we're publishing as an industry more celebrity books than we used to.
4:33
It feels like probably a little bit, but I'll tell you when they work, they're incredibly successful, but there's a lot more risk with them than they used to be.
4:39
And that's because The advance The advance is high. The advance is high.
4:44
And how do you think about when you're in a boardroom, like how much of an advance to give?
4:48
For a celebrity book or any book? >> Any book.
4:52
Well, I mean, the first thing you do is you you try to compare it to something else that you've published or something else that's been published in the world.
4:57
You say, this you come up with comps.
4:58
I mean, it's it's it's the the age-old thing for editors and sales folks.
5:02
How do we What's the comp for this title?
5:04
And when even when the when the sales team sells them in, they're looking at comps cuz that's what they tell the buyers at the accounts.
5:08
Yeah, this book is like this.
5:09
So, the first thing we say is this book we think it's going to behave like that book.
5:12
It might be a book we published, it might be a book someone else published.
5:15
And then we reverse that, you know, we look at the math.
5:18
You know, we have BookScan which gives us the data for physical sales.
5:21
It's a you know, a a database of of POS of point of sale information.
5:25
We can look at the sales and sort of track where we could be.
5:29
Agents also give you sales numbers of books cuz they want you to jack up the advance.
5:33
And then we just do the math and say, okay, if we think this book is going to perform like that book, how much can we pay for it?
5:38
And with that BookScan, does that account for Amazon sales? Yeah, absolutely. That does.
5:43
A BookScan accounts for I want to say something like 85% of the industry.
5:46
There's some of the independents and a couple things here.
5:50
And again, this is physical. It doesn't count ebooks. It doesn't count audio.
5:54
And now, in terms of where the margins are, my understanding is that the hardback has much higher margins than the paperbacks. Is that right?
6:02
Uh >> [sighs] >> again, it it it it depends.
6:02
I mean, the price point the the royalties are different.
6:05
We pay higher royalty on a hardback than we do on a paperback.
6:07
Um it's part of it's accounting.
6:10
How do you account your unearned advance?
6:12
Cuz you know, you're paying an advance.
6:13
If you don't sell enough copies to earn back that advance, uh we we eat it.
6:16
The publisher eats that cost.
6:18
Some people write it off against the hard cover.
6:21
Other people spread it out across the the life of the book.
6:23
So, there that becomes an accounting treatment.
6:25
Um in and of itself, I would say the the the the paperback on a long tail will be more profitable because generally, you're not spending as much money on the marketing side because the marketing money has been spent and the book's going sort of more by word of mouth.
6:39
That's sort of a rough estimate on the profitability of a book.
6:41
And then when a book goes from hardback to paperback, is that that always after like 9 months or a year?
6:46
Like that's priced in or is there a something that happens in the volume, the behavior of the book sales that then accounts for that change?
6:52
I think more often than not, what we try to do is say, "Okay, roughly 1 year out."
6:57
For for for general commercial fiction, 1 year out, you would often switch from hard cover to paperback.
7:03
Now, there's going to be exception.
7:04
Really big best-selling books, you're going to say, "No, that author, you know, it will put them on a 2-year cycle.
7:09
Hard cover year 1, paperback after 2 years of hard cover."
7:15
Um and then you you you you sort of monitor it.
7:17
Now, you have books that are surprises, books that are selling incredibly well in hard cover and their track is continuing to do well.
7:23
You'll you'll keep pushing out the paperback because there's no reason to If it's still selling at this higher price point, why why change it?
7:28
And also, the ebook pricing is dictated on the physical price. Hmm. Explain.
7:35
Well, you know, you're selling a book for you know, 29, 30 bucks.
7:36
Your ebook price is going to be in that 12. 99, 14. 99 range.
7:41
Once you go to paperback, you're going to drop the ebook price, too.
7:45
And are the margins the same for authors and for you guys on the ebooks as the paperbacks?
7:49
No, there's less there's no production cost on the limited production cost on the ebook.
7:54
So, the margins on ebooks are are are slightly better.
7:57
Can we just zoom out real quick?
7:57
Will you give me a sense of how many books are submitted to you guys every year?
8:03
How many books do you publish?
8:03
And the reason I ask is cuz I'm an author.
8:07
I've worked so hard on my book.
8:09
I've been working night and day.
8:11
And now I'm showing up and you are going to reject me. You know, like come on. Like it's me.
8:15
And I think that there's from your I want to get it from your perspective.
8:18
Look, I maybe you wrote a great book, but like this is how many books we're dealing with.
8:23
And I want you to see it from our side.
8:25
Yeah, I I I don't I've never done a count to say how many books are submitted versus how many we publish.
8:31
If I had to guess, I would say conservatively we publish less of than one of in 10.
8:36
It's probably more like one in 20 or 30. That come to you. Right. Okay.
8:39
Now, that doesn't mean someone else doesn't publish those books, right?
8:42
So, and that's another beauty of of that creative process.
8:47
Books that I think were might the editorial team don't think are going to work for us, someone else thinks that they they would.
8:52
A book that I might want to pay $100,000 for, someone pays $500,000 for.
8:55
So, those differences are are out there.
8:58
So, we're we're publishing as an industry probably somewhere in the area of 20-plus thousand books a year. You know, round number.
9:06
It's probably maybe 25 is my it would be my take.
9:08
Um you know, and that's a lot of books. That's a lot of books.
9:13
And but there's still that many more people that want to be out there publishing. Right.
9:16
And how many books do you guys do? We do about 1,200. Yeah. You do about 1,200.
9:21
So, you do about one in 20 of the books that are published.
9:25
Yeah, we're about a 5% market share business, yeah.
9:27
And then Penguin Random House is the biggest. >> Yep. And why is that?
9:32
Well, I mean, they're just they've acquired different companies.
9:33
They've done consolidation over the years.
9:34
So, they've they've bought up a bunch of companies over the years so that's that's what they've done.
9:39
I mean, if you look at their market share over the the last I think decade has been pretty consistent but you know, over the years they've they've added and added to their their business.
9:46
And if I'm an author and I'm like, okay, I want to get in touch with McMillan, what is like what is the best way to do that?
9:54
I I I just always assume that emailing the people at the front door like on the official thing.
9:58
I I just like have a default assumption that that doesn't work. Uh I don't know. What do you do? It doesn't work.
10:07
>> [laughter] >> I mean, this is this is one of the challenges with our business and why people are like so mystified by it.
10:10
You know, we generally don't accept submissions unless it's coming from an agent or or someone we know already.
10:14
And the the process of getting an agent is is also incredibly challenging for for authors.
10:22
So, generally speaking, we have agents we work with, they submit books to us or we have authors that we've worked with and people that we know and say an an editor might come up with an idea and I say, oh, this would be a great idea for this author and they go to that agent and say, hey, look, this is this idea I came up with would so-and-so want to write it?
10:37
Those are the two ways that we get 99% of our books.
10:44
What do you think about with um with non-fiction?
10:47
You know, I was out with some authors last night and there was an author he was saying, you know, I'm working on my email list, I'm working on my Instagram.
10:53
I really want to start building that up as I ramp up my novel and I just sort of paused him.
11:00
And I said, I'm not saying that this is what you should do.
11:02
But what if you just burn the boats and said, I'm going to write the best damn book I can?
11:08
And he said, you know what?
11:08
I think about that all the time but also I try to look at the realities of this business.
11:13
I feel like having my own distribution channels is super valuable.
11:17
What would you say to him?
11:18
I'd say you got to do both.
11:20
Write the best book you could possibly do but also build up your own channels.
11:23
There's really the best way to sell a book has not changed in hundreds of years.
11:28
Which is write a damn good book.
11:30
>> Well, it's that and word of mouth. Right.
11:31
The best thing that you could do is like if you saw marketing, if you saw something on every you read that gives you tells you something to oh, I should buy this book.
11:39
You see it on the side of a bus.
11:41
If your best friend or someone you trusted told you to read the book, which is going to be the thing that's going to get you to buy the book sooner? Right. It's your friend.
11:47
And so word of mouth just looks different today.
11:49
It used to be the trusted reviewer, it used to be a scholarly review.
11:52
Um, then it was you know, for a while we had bloggers.
11:54
You know, we had independent booksellers and librarians in particular that were really influential bloggers.
11:59
This is going back what 15 years ago and they were really driving sales and then it became Instagram and now it's Tik Tok.
12:07
But it's still what it is.
12:07
It's word of mouth, right?
12:08
It's a trusted source giving you a recommendation.
12:10
How do you have crazy ways of tracking things like at McMillan?
12:16
Like when you think of, I don't know, the the the John dashboard.
12:20
Like what are some really cool things that you have and what do you wish that you had that you can't have because maybe there's technology limitations, legal limitations, something like that.
12:30
Well, what I really wish I had was something that monitored how a person was reading the book, when they put it down, when they when they decided to stay up late and not stop reading, when they did that bender to finish the whole book in one right?
12:39
And and some people try to approximate that and there's like oh, I have these group of readers and they're going to tell me, you know, if if someone tells me they've read 30% of the book within the first, you know, day that they get it, I know I got a hit on my hands.
12:51
And people actually send it out to folks to to help do that at a in manuscript stage.
12:55
So for me, if I could really track readers behavior, that would be great cuz you know, self-reported information is always you know, it's less reliable than actual behavior.
13:05
So if I if I knew what people were actually doing, if I can interact with people more directly than we can cuz most of our interactions are indirect.
13:13
If we market to someone, it's a it's it's somewhat indirect action cuz I'm putting it out in the world and then a bookseller makes the sale.
13:20
So if I could track how my ad actually generated a a sale, um, that would be incredibly valuable cuz then I would know how to change my ads, I'd know how to change maybe the demographic that I'm reaching in. We approximate it.
13:33
You know, we have things that we could we could track pieces of it.
13:36
We just can't track it the same way an online retailer if you're going to buy toothpaste.
13:40
You know, you put an ad out and someone clicks on that and buys it through that click.
13:44
We can't do that the same way. Hm.
13:46
And do you feel like I mean, it's kind of hard for you to know almost by definition, but do you feel like the tools of tracking are basically equal amongst the big five publishers or is one of the publishers more data-driven, one more field-driven?
14:01
I have no I honestly don't know and if I did, I'd you know, I'd go to antitrust jail. Right.
14:04
So, um, [laughter] the uh which is a big thing in our world still.
14:07
Um, my instinct is of course like anything else, some are probably better than others.
14:12
I I think we're probably somewhere in the middle.
14:15
What are the pros and cons of being in New York?
14:17
I remember I had this experience many years ago.
14:18
I had a meeting at Penguin Random House.
14:22
No, that's that's not true.
14:22
I was going to interview Ryan Holiday and we did it at the Pen Penguin Studios.
14:26
And I remember I got off the Q train or something and I was on my way and I saw Universal Music Group and I saw I think I went by CBS on 53rd and 6th.
14:34
It was something like that, right?
14:37
And I just had this moment of being like, "Oh my goodness, the home of radio, the home of TV, the home of books, the home of music, all right here.
14:46
This is crazy within a few blocks."
14:48
And then at the time I was living in Texas and I remember going back and having this distinct sense that wow, culture in New York is so different from culture in other parts of America.
15:02
And so on one hand, the benefit of being in New York is you're right by everybody, you know, you can easily just pop over four blocks and talk to somebody else who works in the industry.
15:11
There's parties, we're people there.
15:12
And at the same time, New York is one of the most different places from the rest of America and the rest of the world.
15:20
So, how do you think about the advantages and disadvantages of being here?
15:25
I I think about it all the time because there's there's a little bit of a bubble effect, which is essentially what you're saying, and that's good in that you have a lot of people in like-minded areas, um you know, working towards similar things.
15:37
So, there's an energy, there's a uh scale, there's an excitement around it.
15:42
But, then also we miss sometimes.
15:42
We don't know what we don't know or we're missing trends.
15:45
I I personally believe a reason self-publishing is so big is that traditional publishers were just not seeing trends that happened um or that were developing outside of New York.
15:54
So, here's a a great story.
15:56
Years ago, when I was running the children's division at McMillan, we um we were seeing that there was a sort of a a rise in in in self-publishing, and we wanted to acquire this book, and it didn't happen.
16:08
But, what we realized in that process was there were a bunch of people out there reading things or wanting to read things that we weren't publishing.
16:14
So, we created something at the time called Swoon Reads.
16:17
It we we we ran it for a few years, and and it it just it didn't work out exactly the way we wanted, but we've had some great successes with it. Yeah.
16:25
What do you think is the downside of being data-driven, right?
16:27
So much of the world has moved towards data-driven, moved towards the kind of Reddit-style up votes.
16:32
And data-driven, you know, if you say if if you walk into a boardroom, you say, "Hey, we made a data-driven decision."
16:37
That's like an unequivocal good.
16:38
But, let's poke holes in that.
16:40
What's the downside of it?
16:40
Well, I I'm a I wouldn't say it's an unequivocal good.
16:44
What I always say is I want all the information so I can make a gut decision. Huh. And and I believe it.
16:47
Uh yes, I like information, I like data, but there's an element to what we do that is still feel.
16:55
If you I haven't seen the algorithm yet that can identify the outlier. Right.
17:01
>> And the biggest books we have are often the outliers.
17:03
I mean, you go back through history.
17:05
I mean, the Harry Potter's the the best example.
17:09
Almost all the New York publisher I think all New York publishers but one rejected that book. Is that right? Yeah.
17:13
And that's not the And that's not the only book that that's happened to.
17:15
So, you know, that's the outlier.
17:19
What do you make of that?
17:19
Is it just so hard to know what's going to resonate? Yeah.
17:25
I mean, >> [laughter] >> if I had the crystal ball, I would have used it a long time ago, right?
17:27
Uh things that we think are slam-dunk winners don't work, and things that we are like, "Ah, this will be nice."
17:35
you know, turn out to be huge successes. It happens all the time.
17:38
And yeah, there's a lot of stuff in the middle that we get pretty close to right, but that's also what makes this business fun.
17:43
If it was If it was, you know, plug and play, I I think that we wouldn't like it as much.
17:47
It's that creativity isn't an algorithm. It's just not.
17:51
So, yeah, I want that data.
17:51
I want I want to AB test my my ads.
17:53
I want to maximize my metadata.
17:56
I want to make sure that I know what's working in the things I control, but I also have to be realized that there's magic to the outliers, and there's magic to creativity, and if you get the right editor who just has that feel, you got to go with it. Oh, tell me about that.
18:09
I mean, I've had this throughout my career.
18:12
There've been people that are like, "Well, why did you let her buy that book?"
18:15
I'm like, "You see the other 100 she's already bought that have been huge successes?
18:20
Maybe this one won't be it, but if you know, her track record's great.
18:21
She knows how to how to how to deliver.
18:25
Doesn't mean it's going to happen every time, but there's certain folks that just know how to look at a book and make it the best it could be, but maybe even more importantly, know how to read through something say, 'That's the next thing.'
18:38
And I think we're losing that a little bit, too.
18:40
I think, you know, the way to do that is you got to read a lot.
18:43
You got to read a lot about the competition.
18:43
You have to be out in the world, and it's becoming harder and harder to do that because we're publishing a lot of books, and the marketplace is crowded, but there are certain editors that just have that innate ability to to know.
18:53
And, you know, yeah, you're not going to give them carte blanche, but at the same time, you're going to give them the benefit of the doubt when they're coming and asking for money.
19:01
We were talking earlier about risk.
19:05
And there's almost two sides of risk, right?
19:07
There is the "Hey, I want you to be take more risk, take more risk."
19:11
The problem is your business, you need some sort of predictability.
19:15
You can't have super high variance when you think of your fixed costs and there are stakeholders that you specifically report to and you need to deliver them financial results.
19:24
And then on the other side, there is the what this would be my critique of Hollywood that a lot of people feel the rise of sequels.
19:32
Oh my goodness, we're just sort of regurgitating the same thing.
19:34
The risk tolerance is getting lower and lower.
19:37
People are looking more at the franchise maybe than the underlying quality of the content and that's not risk-averse enough.
19:43
How do you think about the trade-offs between those two?
19:48
It's it's a really good question.
19:48
It's something that we we struggle with.
19:50
I think at Macmillan one of the benefits we have is we focus on the books. We focus on authors.
19:55
We wanted to we we also were a privately held company.
19:57
We have two shareholders.
19:59
We're able to have a long-term view of the Who are the shareholders?
20:02
There are two folks in Germany.
20:03
It's a it's a it's Stefan von Holtzbrinck and his niece Christiane Schuler. So, they're the owners.
20:07
They have a passion for what we do.
20:10
So, they enable us to take a little bit more of a long-term look. I mean, look.
20:15
It's it's a gift to not work for a publicly create publicly traded company in a creative business cuz creativity doesn't work on a quarter-by-quarter basis, right? It just doesn't.
20:22
So, that's something that I'm you know, I don't take for granted.
20:25
So, we we invest in authors.
20:27
We invest in in in in the books themselves.
20:30
We want to we believe we have like a personal touch in how we do it and that creates an atmosphere where we think we can have success.
20:35
I mean, you know, maybe we can talk about it now or talk about it later, but yeah.
20:40
The the concept of of creating an atmos an atmosphere where creativity can thrive is I think my biggest job. Tell me about that.
20:45
You know, so my background is is business side.
20:47
You know, my grandfather was a professional musician. I played music. So, I have creativity. >> of music you play?
20:52
I I was a guitar I'm a guitar guy.
20:54
I played you know, blues and classic rock.
20:55
You know, that's that's >> Okay, cool. Who are your favorites?
20:58
Well, I mean, you know, B. B.
20:58
King, Albert King in terms of the straight blue guy.
21:02
Love Stevie Ray Vaughan, but then I'm I'm a big Pink Floyd fan.
21:04
So, and then and then you know, then I came, you know, child of the late '80s, early '90s.
21:10
So, you know, Nirvana, Pearl Jam, you know, Jane's Addiction, Violent Femmes.
21:14
So, it's a it's a it's across the board.
21:17
>> [laughter] >> And I love jazz, too.
21:18
My grandfather was a jazz guy.
21:19
He was a swing guy, but I like that straight-ahead bop.
21:21
So, like Art Blakey and the Jazz Messengers, Wes Montgomery, those are, you know, some of my favorites.
21:28
>> Real quick, then then we'll get back to it.
21:29
What's the best jazz club in New York City? It's so hard.
21:32
I I am still This is old school, and it's more about, I think, history and vibe.
21:36
I still love the Village Vanguard. >> Oh, yeah.
21:39
>> And it's just, you know, I'm actually supposed to go out with someone tomorrow night, and I'm still waiting to hear back from her if we're going to go out. She wants to see music.
21:44
She's only been in New York for a short time, and then my immediate reaction was the the Vanguard.
21:49
So, we'll see if we if we go, cuz it's it's the quintessential ex- you know, jazz club experience.
21:54
It's not a it doesn't it hasn't become a venue.
21:56
A lot of the other places are like a venue.
21:59
Here, you can still go in, and especially if you're during the week, and you almost anytime, if you want to stay for a late set, you just buy You know what I mean?
22:06
It's And that's the way I grew up with my grandfather.
22:08
It's like you're you're here, you're listening to music, and you just, you know, keep listening.
22:12
If you need to buy another drink, you buy another drink.
22:15
It's not come in, take your seat, be quiet, leave in 45 minutes.
22:17
And a lot of places become that. And jazz is interactive.
22:21
So, you got to make sure you have that interactive experience.
22:24
And a great creating the environment where that can thrive, right? >> Yeah.
22:27
So, that's what I try to do in the in the in the publishing space is having that more of a business background is like you need to create a space where the editors can be their best, the designers can be their best, the mark- everyone could just say, "It's about the book.
22:39
It's about the creativity, and how do we take this to the next level?"
22:42
And the authors, they feel that.
22:44
You know, when I have conversations with authors, like, "Thanks for giving me the time to do this."
22:48
Or you're you're created a really welcoming space. And it matters.
22:52
And so, when I told our owner that that when I started, you know, over 15 years ago, she goes he goes, "What's the first thing you're going to do?"
22:57
I go, "I'm going to create an environment where creativity can thrive."
23:00
They gave me a little bit of a look, but he's like, "Okay. Okay, I get it."
23:02
And we we had some great success.
23:03
And you know, then you know, I that was 15 years ago. So, it worked out.
23:07
What companies have done a really good job of creating that environment?
23:11
And what specifically have you taken from them?
23:15
I think it changes over time.
23:15
I'd like to believe McMillan's had it for a very long time, and not just because of me.
23:18
I think that's been an ethos that we've had in in the company for a while.
23:21
I think at various time, you know, I worked at Disney for a little bit of time.
23:26
I And at that time I did some >> You were in their publishing department?
23:29
>> in their publishing division, which was part of consumer products.
23:30
So, I did a little bit of both.
23:32
But you to go to Pixar's campus and to watch how they approach creativity was like all about the movie.
23:38
It was all about the story.
23:40
It was all about the animators.
23:40
You'd sit there and watch John Lasseter talk about whatever he was going to be doing.
23:46
And you could see it was 100% about what would end up on the screen.
23:48
So, they they got it right.
23:51
You know, they got it right.
23:52
And so, I think about stuff like that.
23:54
I think about my grandfather when I watched him on stage.
23:56
And he you know, he could be a tough taskmaster. He wanted perfection.
23:59
And perfection wasn't getting every note right.
24:01
Perfection was getting the vibe right. >> Mhm.
24:04
So, how do you how do you capture that in the setting of a publishing company?
24:08
That's what I should you know, try to be. You know, it's funny.
24:10
You talk about the note versus the vibe.
24:12
So, last night I saw Wicked.
24:13
And uh so, it's the end of the play.
24:15
And they had this weird thing where they finished the play. Everyone takes the bow.
24:23
And then a guy gets up and he has this card.
24:26
It's basically kids night.
24:28
So, with a full paying adult, a kid could get in for free. Which is great.
24:32
But like the play is just ended and this this this wasn't quite the vibe that I was going for.
24:36
But then he goes, um when I was a kid, I came here on kids night.
24:41
And I was sitting there in row, you know, 27.
24:43
And I looked at my mom at intermission.
24:45
I said, I want to be on stage one day.
24:47
And my heart was so warm.
24:50
Like I'm almost like moved to tears talking about it.
24:51
Like he was so sincere and so endearing to hear him talk about it.
24:57
But you talk about the vibe in the note, he then looks at his paper to say exactly what he needs to say and it completely killed the vibe.
25:05
>> [laughter] >> And it finished and I turned to my friend, I said that is a great example of if you speak from the heart and you're imperfect, it is so much better than speaking from the head and being perfect.
25:14
One of the things that people say about me that's the biggest compliment I ever get is like, "You're incredibly authentic.
25:19
We could tell that you're being genuine when you talk, even if we don't like what you're saying."
25:23
>> [laughter] >> And and you know, that's important to me because I I can only be myself, right?
25:28
And I try to do it with kindness and I try to do it with with with caring and and sort of listening to what people need, but being able to bring that is not everyone does and I think in a creative industry, it's it's quintessential to making people feel good about where they are.
25:41
We're in publishing, you know, there's an altruistic nature of what we're doing. It's never bad to read. It's never bad.
25:47
And if we can create an environment where people can, you know, bring bring everything they have to the to the business and do it in a way where they're not scared of making a wrong call, we're going to win in the long run.
26:00
Okay, so we're talking about how do you get your writing done?
26:02
And if you're thinking about work and how you can be more productive there, well, I recommend a tool called Basecamp.
26:07
Basecamp is a project management tool and it's different from the other ones which are loud and noisy and cluttered. They have feature bloat.
26:15
Basecamp says, "No, no, no, no, no.
26:17
We're going to keep things simple so that you can focus on what actually matters, which is just getting the work done, you know?"
26:22
Now, for us, Basecamp is a place where we can track what we're doing with How I Write, when episodes are being recorded, where we're recording them, the publishing day, all those sorts of things in one place for our entire team to look at.
26:34
>> [music] >> And I had the founder of Basecamp, Jason Fried, he came on the show and I noticed that he really cares about writing.
26:39
He cares about manifestos, he cares about great copy, he cares about telling a great story and him and his co-founder, they've written five books and I can tell you that they bring the same care and attention to detail to their books as they do their [music] software.
26:55
So, if you're thinking about work and you're asking, "Hey, how can I be more productive?
26:59
How can I make my team more cohesive?"
27:00
Well, then I recommend Basecamp. All right. Back to the episode.
27:07
There's two places where I've seen kind of formula creep into the publishing industry, and I'm going to be deliberately uncharitable just to be provocative.
27:14
The first is and I'll put the the the images on the screen.
27:16
Like you walk into a bookstore, and it seems like all the fiction is exactly the same cover.
27:23
You could look at 50 images and the titles or the covers all look exactly the same.
27:28
And I'm like, "What is going on?"
27:30
Like you know that Crazy Rich Asians look?
27:31
It feels like it was just copied and pasted onto 74,000 different titles.
27:36
And then also, I hope that AI changes this, but there was this formula in nonfiction, which was basically start with a story, make your point, share a few anecdotes, and just do that over and over and over again.
27:52
And it was so monotonous, so laborious.
27:54
And it felt like, you know, like the charge of like great writing that used to be there, like the crazy independent writer.
27:59
We're talking about Hunter S.
28:01
Thompson, like, "Wow, Fear and Loathing.
28:03
You've never read writing like this."
28:04
It's like it felt like maybe there wasn't room for that.
28:07
Maybe writers were too scared. Like what was going on?
28:10
What's going on with those things?
28:12
>> Well, I think this isn't this isn't, you know, specific or unique to the publishing industry.
28:17
For as long as I can remember, when things work, people want more of it, right?
28:21
>> you're going to you're going to say, "Oh, that worked.
28:22
Let's Let's Let's try to do the same thing."
28:23
Um you know, you you said, "Whenever I go and everything looks the same."
28:27
Except for the ones that don't. Sure.
28:30
>> And those are the ones that don't are a lot of times people taking the risk, and that might become the trend of tomorrow.
28:34
I mean, I remember back in the day when I was at Disney, one of our designers created this this cover look that had, you know, oversized image of a person's face wearing glasses and a reflection in the glasses.
28:43
That became de rigueur after that for a while, right?
28:45
But she was the first to do it. Mhm.
28:47
So, uh uh you you need some courage.
28:50
You need you need the strength in your belief in the book and in your marketing positioning.
28:56
But we're not We're like everything else.
28:57
People chase what's what's working for a while.
28:59
And then you get pressure to do it, too.
29:00
You know, you might get an account and well, if you make that cover look a little bit more like this other one, I'll take it or I'll I'll take instead of taking 3,000, I'll take 10,000.
29:07
So, that becomes part of the calculus and you have as a publisher, you have to say, "Look, I believe this is the cover that's going to work."
29:15
And if they only want three, they'll come back for the other seven later cuz the book's going to work.
29:18
Or you say, "No, this is one where I got to get the books in the store and see what happens."
29:22
And you're not always right with the call you make, but it happens you know, look at it Look what you see in Hollywood, right?
29:26
You're seeing a lot of things that are just some other version of what you saw before, too.
29:31
It's it's It happens in all creative businesses. Yeah.
29:36
Kind of a weird question to ask, but I think it's an important one.
29:37
How much should writers be pushing back on you guys?
29:41
I feel like a lot of writers are scared to.
29:43
Oh, you're the big publisher.
29:45
Um what would you tell us?
29:46
Pushing back it depends on what. You know? Yeah.
29:48
Um I think it's a To me, it's a partnership and I think we approach that with many of our books.
29:55
So, we need the author to be there not just to write the book, but to help promote it.
29:59
It's more important now than it's ever been and I think some authors are saying, "Hey, you know, come on, you got to do some more." You know what? Everyone wants more.
30:06
We want more, they want more.
30:08
We got to find that right balance.
30:10
So, I think we should have a conversation, make sure that push back I think the healthy push back is, "Hey, here's what I'm thinking about the jacket.
30:16
Here, you're in the editing process."
30:18
You want that that that that the truthful back and forth.
30:20
I was just speaking to to one of our our editors yesterday about a major major author we have on our list and the conversation they're having about editing their next book.
30:29
And I love the fact that the the author trusts her enough to you know, give her the unvarnished truth cuz you know what?
30:36
Some authors don't want to hear it.
30:37
Other people like to be you know, given to me, give it to me. >> Right.
30:40
And there's a you know, unlike living vicariously about hearing their editorial conversations. Yeah. And it's really great.
30:46
So, find that balance, have an open conversation of what your expectations are, what you need from the publisher, what the publisher should have the same kind of open conversation about what we need from them, and you can try to find that balance.
30:56
And it doesn't always work, right?
30:58
Someone always feels like maybe they should have done more, or maybe we feel like, "Oh, the author's being a little unreasonable."
31:03
It happens, but I think if you have that open dialogue, you give yourself the best chance of everyone feeling good about the process and the book having the best success, right?
31:09
Um talk to me about the economics of a book and who gets the different cuts at different levels, and how that changes over time with the different going from from hardback to paperback to ebook to Audible, and then also as a book becomes more successful.
31:33
The biggest cut goes to the the retailer. Mhm.
31:36
So, if you're just pick round numbers, say it's a $30 book, more than $15 of that is going to go to the retailer.
31:42
>> So, that's a Barnes & Noble, that's an Amazon.
31:44
>> Amazon, and all in the That's You're generally speaking, we're getting less than than 50 cents for every dollar cover price as a starting point.
31:50
So, that's the revenue that comes to us as a as a starting point.
31:54
Um I hope and I think I can say that without getting myself in in trouble cuz it's broad enough.
32:01
So, then the author's going to get, you know, a royalty.
32:02
And the royalty's based on the $30, generally speaking, not the money that we get from the sale.
32:06
So, that dynamic, you know, changes just based on the cover price, but day one, book comes out, an author's going to get on a hard cover anywhere usually from 10 to 15% of the of the cover price.
32:17
So, you're talking on a $30 book somewhere between $3 and $4.
32:21
50 for every copy that's sold.
32:24
This is separate and apart from the advance that we've already paid them cuz so the way that the the you know, you know this, but the way the the the publishing industry works is we usually give the authors upfront money that's considered an advance against the royalties that we will pay them over time.
32:36
And if we sell enough books to earn out that royalty, we give them more money.
32:40
If not, they keep the advance that we that we gave them and we sort of eat the difference.
32:43
And that So, that's Those are the So, the the author cost is the single biggest charge, and then you have the printing costs.
32:49
You got to print the books.
32:51
So, that'll be the second biggest charge that's coming there, and depending on the length of the book and the you know, a cookbook costs more to make than a a novel.
32:57
You know, they'll be they'll be different dynamics there.
33:00
And that is probably roughly, you know, that'll be the next biggest cost.
33:05
And then you have you know, freight.
33:07
You got to get the books from the printer to the warehouse, from our warehouse to the to the booksellers.
33:13
That's that's another cost.
33:13
And then you have marketing.
33:15
And you have marketing Marketing is is you know, distribution and freight, marketing probably around the same depending on the book, maybe marketing will be a little bit less.
33:24
So, those those are ballpark, and then it's all And that's before any of our overhead.
33:28
That's before we pay the the editors.
33:30
That's before we pay the designers.
33:31
That's before we pay you know, for the our facilities.
33:36
So, that that's sort of I don't know.
33:36
I I can go into more some more detail, I guess, if you want to, but it's hard to uh I want all the detail. This is fascinating. Yeah, it's true.
33:42
I mean, I guess the Like put it this way, in the most Let me start by saying that having worked in the music industry, having worked in the film industry, there's no more creator-friendly business than the publishing industry.
33:58
The The The authors get a bigger percentage of total revenue than in any other creative output where you where you're working with a traditional outlet.
34:05
If you're self-published, it's different.
34:07
If you're If you're working in some sort of you know, hybrid situation, it's going to be different, but in traditional forms of media and entertainment, there's nothing that's fairer or or where the creator gets a bigger cut than in publishing.
34:18
So, that that's sort of the starting point um where where I sit.
34:22
And also, the the contracts are pretty clear about what you're going to end up getting where you know, there's always these crazy stories in the entertainment industry and >> They call it Hollywood accounting. >> Right. Hollywood accounting. You got it. So, we don't have that.
34:32
You know, maybe we have this much of it, maybe a small amount, but it's really not.
34:37
It's It's very straightforward.
34:39
So, I think that's the that's the you know, that's the biggest takeaway for me and it makes me feel good cuz I started out, you know, my entertainment career after I was doing concert stuff, as a as a lawyer representing talent. Right.
34:51
>> So, I know that in the publishing world we're we're sort of paying people a fair amount of money.
34:57
And then what you're left with is uh the biggest percentage of the of the of the revenue that a publisher collects goes to pay the author.
35:04
It's just really that's that's what it is.
35:06
And back over time, backlist books are more profitable cuz we talked about a little bit earlier because, you know, you maybe need to put a little less marketing in it.
35:13
You can maybe be printing the paperback printing costs are less than a hard cover printing costs.
35:18
You do sell them for a little bit less.
35:20
So, I mean, those are some of the the big the big broad strokes of of how it goes.
35:26
And then how does the how does all that change per per market, right?
35:29
So, I sell in America, then I go to the UK, go to France, go to Canada, then I go to India, then I go to Vietnam, Taiwan, whatever whatever else it is.
35:38
How do the royalties change internationally? Well, it depends.
35:44
I think different different markets have a similar royalty structure to us.
35:47
I think in in many of the European markets you might have a slightly lower royalty scale than what you see in the US, but it depends on who's selling the rights.
35:54
As a publisher in the US, we often just get North American rights, the ability to publish the books in North America and maybe, you know, some open market territories, meaning, you know, maybe we can go into Europe, maybe we can go into other places around the world in English. Hm. In English.
36:09
Um sometimes we get world rights, which means we can sell translation rights around the world.
36:12
And if we do that, then again, the bulk of the share of what we collect goes to the author after that advances earned out.
36:19
So, you'll have a scenario where it's not uncommon for an author to get 75-plus percent of any money we receive from licensing a book for foreign language translation, which is, you know, a typical thing.
36:30
50 maybe 50% is in maybe in a newbie author, but you know, a 75% share to a foreign rights translation license to an author is fairly common.
36:42
How do you think about sequels?
36:42
So, like I just had Lee Child on the show.
36:45
I think he's written 25 26 Jack Reacher novels, like so many.
36:48
And how do the economics of sequels work out?
36:56
I mean, first of all, if people want sequels, you should write sequels, right?
36:58
You know, you it's it's out there and there's different kinds of publishing for different kinds of, you know, audiences.
37:02
And it it all depends on what they're paying the author for the book, right?
37:07
If you're if you're price I I've heard so many stories about big authors saying, you know what?
37:11
I don't sell what I used to.
37:13
I'll take a little bit less on this one. >> Huh. And that's great.
37:16
And when And then when the book's, you know, maybe take off a little bit, they'll they'll they'll say, well, maybe you should give me a little bit of a kicker this time around.
37:23
That kind of partnership does not exist in many other forms of of media.
37:27
Um, it boils really on sequel, the profitability boils down to how you know, if it if the market is still there, it boils down to how much the advance is going to be to whether or not the book is successful. And you know what?
37:39
We take smaller margins on some of those sequels cuz we know it's more guaranteed.
37:43
So, we say, you know what?
37:45
This this book is has a built-in audience.
37:47
The author's developed that.
37:48
We've helped the author do it.
37:48
We might, you know, say, look, we'll give you a couple more bucks even though it means we might not make as much or we'll make the same amount even though we're selling more copies.
37:54
It becomes a calculus in your business calculation, you know?
37:59
And how much of your business is back catalog versus new books? >> We're about half. Half back catalog?
38:05
>> Yeah, and that's probably low in the in the industry, definitely low on the kid side. >> Wow.
38:08
So, back catalog is really just huge. >> Yeah.
38:13
When we say back catalog, we're talking about everything that's basically over a year old, right?
38:15
That's how we look at it.
38:17
So, you know, we publish a book in 20 in 2025, that's considered, you know, back backlist, you know, right now. So.
38:23
And are have there been more has there been more M&A in back catalog over the years, less?
38:28
Well, I mean, when you talked about consolidation earlier, a big part a big driving factor of that is is backlist. Right?
38:36
Because yes, you you you have books under contract and you got to believe those books are going to work, but you're acquiring that, you know, 50 plus percent of of the list that you think is tried and true that's going to repeat.
38:46
You're almost like buying an annuity.
38:48
So, that's whenever you're doing an acquisition, it's really it's it's often driven by it's either driven by the backlist or talent that you want to bring into the company, be they author or editor.
38:58
Let's define back catalog as 10 years or older for the purposes of this right here right now.
39:05
How is marketing different for 10 years and older back catalog versus a new book?
39:12
Well, it's I mean, it's completely different because, you know, the the the publicity I'm a big believer in publicity to sell books cuz publicity is a form of word of mouth what I talked about earlier, right?
39:21
So, that that that trusted source might be coming in uh you know, a a talk show or something you know, something that is creating that buzz.
39:30
So, publicity for frontlist I think is the the single biggest thing you could do is is to get the word out. Frontlist is? The the new books. The new books, right.
39:38
A a book that's 10 years old, you're not getting it on a morning show, right?
39:42
In in rare instance, maybe there's a news event or something.
39:47
So, it's really now and I think this is where technology can help us.
39:48
It's how do you raise that visibility of that book?
39:54
How do you take that 10-year-old book and make it discoverable today? Movie, TV.
39:57
Well, the movie TV is a publicity moment.
39:59
That's a completely different thing.
40:00
And yes, you know, we we And then we try to create some moments.
40:03
So, last year we had the 10th anniversary of The Nightingale, one of Kristin Hannah's books.
40:07
We we did an anniversary edition.
40:09
We created a moment and it you know, what it worked and it was and it was it was great.
40:12
And people loved the special edition.
40:14
We we a really beautiful copy and Kristin is actually, you know, doing so well.
40:18
So, it's it was a great way to celebrate her and to celebrate that that book.
40:22
Um so, you could try to, you know, anniversaries are a great way to create buzz, but outside of that, it's how do you maybe tweak that metadata?
40:29
How do you make it more relevant?
40:31
So, when search, when people are searching for a topic, it rises up.
40:36
>> That's how you would do it on a on a much older backlist title. Right.
40:39
Yeah, I'm thinking like if you have a book like Antifragile by Nassim Taleb or The Black Swan.
40:45
And every time there's a black swan event, you could basically tweak the metadata so that something happens there. >> Right. Right.
40:53
You spent many years working in the publishing industry for kids.
40:56
How is that market different?
40:59
It's it's a lot more complicated.
40:59
For for starters, you know, you have four-color books make up a big portion of the the picture books make up a big portion of the list.
41:06
Picture books are expensive.
41:07
There's a different process.
41:10
There's usually well, often two creators, not only you have an author and an illustrator, sometimes you have a same person that does both.
41:16
>> And when you say expensive, you mean expensive for you, the publisher? >> Yeah, that's a print. Yes.
41:19
They're they're more a 32-page picture book costs as much to print as a 400-page novel. Wow. >> Yeah.
41:26
So, it's and and you you charge $30 for the adult novel, and you charge $19. 99 or $18. 99 for the picture book.
41:32
How are you making up for that margin? You don't. Huh. You don't.
41:35
I mean, you're taking all the the kids books have a smaller margin, and you hope that over time, you sell a lot of copies, so the dollars the dollars work. Yeah.
41:42
And how's the cut distributed between authors and illustrators for kids books? >> Almost always 50/50. Oh, really?
41:50
>> Yeah, almost always 50/50. Yeah.
41:52
Um and then the other thing I gathered is that kids books they don't need to sell quite as fast.
42:00
It they tend to backlist.
42:00
When we talk about the older catalog, there's new kids every year, right?
42:03
There's kid kids being born, and books that work tend to live longer in the children space.
42:06
Uh it's it's still not easy, um but you generally can get a longer life out of a out of a kids book versus opposed to like a celebrity memoir, if it doesn't work in the first 6 months, it's probably never going to work.
42:20
Yeah, it's funny that you talk about the back catalog.
42:23
I was thinking about why and what my kids read in terms of non-fiction or whatnot, I mean, that's their choice, but like they sure as hell are reading Where the Wild Things Are.
42:33
They sure as hell could read Babar and this flight this book about Charles Lindbergh and maybe the reason that the back catalog is so good is because parents really want to share those experiences with kids.
42:43
I think so and you know, this has been a conversation for a really long time now.
42:49
When are are ebooks going to take over the kids book space and we had a little bit moment call it a decade or so ago where ebooks were getting some traction and we still sell kids ebooks, but it's small compared to the physical books and
43:01
it's still something about, you know, you know, you know, cuddling up in bed with a with a device as opposed to a book and I I would have thought that that it might have changed a little bit more by now, but it just has. Like my
43:12
Like my daughter's going to be 19 this year and so she's not the best, you know, sample because both me and her mom are in publishing and so she had books in in and around her life, but she, you know, her friends, the people her age, they are they had they still have the same same connection to physical books.
43:30
They're they're not embracing.
43:30
You know, they'll they'll read, you know, stuff on on digitally.
43:34
They'll read on their phone all the time, but there's still a connection to the physical book and I think that's going to, you know, if she ever has kids, I think she's going to be whipping out, you know, you know, one of the one of the the classics and reading it in in physical form next to her kid in bed as opposed to on the phone. Oh, 100%.
43:49
I, you know, I don't have kids, but I stayed at a friend's house in Austin on Saturday.
43:52
And it was the end of the night and they do a they do prayers every night and so there's all these there's all these books with prayers and songs and whatnot and so the daughter name is Cece, you know, 2 and 1/2 years old so it's Cece gets to pick, right?
44:07
And she has so much fun flipping through the book and looking for it.
44:09
And that moment is both so much more intimate, it's so much more personable and friendly, and it's more intuitive for her flipping through the books.
44:16
Rather than you go on a screen, you ruin the entire experience.
44:23
I mean, I I love picture books.
44:23
I It's It was sort of like a a dirty little secret of mine, cuz you know, they they had a moment when I when I started in the know, it was a tough market.
44:30
They They've come back and they're still great.
44:33
I absolutely adore picture books.
44:35
I love When I When I got the job at McMillan running the kids division, my buddies from college like, "Oh man, you get to do what you always liked for a living." Wow.
44:42
>> So, it was at that time.
44:42
What do you love about them?
44:43
What do you love about them?
44:44
There's There's so There's so many things.
44:46
First of all, they're beautiful, right?
44:47
And they're physically beautiful. >> Yeah.
44:49
But the storytelling is is is incredibly complex. Huh.
44:52
Um any kind of illustrated book, there's really three types of storytelling.
44:56
You have the the words, you have the images, and then you have the space between.
45:03
It's almost like you have to be a director when you're seeing is what's coming next and like all the illustrators, all the picture book people will talk about the mystery of the page turn.
45:10
What happens when you see what's on the right side, which is not the next page, right?
45:13
You're flipping the book, but you see the right side of the page first, but that story continues on the left.
45:18
How do you make that tie together? It's truly magic. >> Wow.
45:22
>> And then there's space between, right?
45:24
You have to figure out, "Oh, they just showed me this picture.
45:25
Now the story's moving on.
45:28
What happened to get there?"
45:30
And your brain is processing that.
45:30
And the kids' brains are processing it.
45:31
So, I just I absolutely adore What are your favorites?
45:36
Uh I mean, it's You You mentioned Where the Wild Things Are, right?
45:38
I mean, it's hard We don't publish it, so it's hard for me to say, but it's a classic.
45:42
And And I was lucky enough to publish when I was at Disney, we published Maurice Sendak.
45:47
So, it was It was It was really nice.
45:49
We did the Brundibar book with with Maurice Sendak and Tony Kushner.
45:52
So, that was That That was really great.
45:55
Uh when I started at McMillan, it was I was very fortunate that we published the Caldecott winner.
45:58
Um I I weeks late I mean, I started like the first working day in January and two weeks later they announced the the ALA honors and it was it we we we won for sick day for Amos McGee.
46:08
And what's so great about that story is it was a husband and wife team that did the book.
46:13
He wrote it, she illustrated.
46:13
Phil was the it's Phil and Erinstead.
46:15
And Phil is it also an illustrator.
46:18
And he basically wrote this book for his wife to illustrate. >> Wow.
46:23
And she and it was her and it was her first book.
46:25
And it won the Caldecott, the highest honor we have for illustrated books.
46:28
And it is just a marvelous marvelous book.
46:29
So that that's another one of my favorites.
46:32
And I mean we can go on and on, but I let's just stick with those two.
46:36
>> Man, you love children's books. That's cool, man.
46:38
Yeah, I know it's interesting.
46:39
Um it's a complex business and I'm the third CEO in a row at McMillan that was a children's book publisher at one point in their career.
46:46
What do you think children's books authors understand about the human psyche that novelists, non-fiction, you know, more prose style writers might not?
46:54
I I don't think they understand anything more.
46:55
I think that they they they get to be the inner child more, which is we all want to do.
46:59
And adult people in any form of adult media don't always get to embrace their inner child.
47:05
So children's publisher a children's creators do.
47:07
But I think the one commonality that every children's creator has is they treat the kids with respect. >> Mhm.
47:14
They never talk down to the kid.
47:16
They they they know how smart kids are.
47:18
They know how insightful and empathetic kids are and they play to that.
47:21
And they and they they take advantage take advantage of them but they take advantage meaning they help kids celebrate that. Yeah.
47:28
What do you think Waterstones has remained so successful relative to Borders, Barnes and Noble?
47:34
I mean, I go to London and Waterstones is everywhere.
47:39
And also Waterstones rocks.
47:41
Like there's the Piccadilly Waterstones, four five stories, and maybe this isn't fair.
47:47
Um but I think it's true. I want to be honest.
47:49
Like I never really enjoy going to Barnes and Noble.
47:52
Like I don't go in there and have like a great experience.
47:54
I it feels like very just feels like super mass market.
47:57
It I rarely find super interesting books that I wouldn't have found other otherwise.
48:01
I walk into Waterstones and that is like Disneyland for books. It is fantastic. >> So, I don't know. This might be a spoiler.
48:10
The same guy runs both stores. >> No way.
48:13
>> [laughter] >> Yeah, okay.
48:14
Then that's >> James Daunt is the CEO of both companies.
48:17
>> That I double Wait, is that Daunt from Daunt Books? Yeah. Oh, okay. I love Daunt Books.
48:21
The Daunt Books and Marleybone is one of my favorite book stores in the >> Oh, that's a great store. I stayed in one of them. >> more.
48:27
Okay, then I double down on my question.
48:29
My question got 10x more interesting.
48:30
How can the same guy run both and Waterstones is so much better than than than Barnes and Noble?
48:35
>> you got to bring him on the show and ask him cuz I think I know what he's going to say, but there's no way I'm going to give you his answer.
48:40
>> [laughter] [gasps] >> Okay, well, here's another international question.
48:44
Why is it like this is my take.
48:47
When I look at American books, they're so loud.
48:49
They're so like They're so um blunt almost.
48:54
It's like punching you in the face.
48:56
Like business really dominates. I go to Montreal. I go to Paris.
49:00
The books tend to be way less artistic.
49:03
They tend to be gray, black, white.
49:05
Like they're not screaming for your attention.
49:06
And then I go to England and England has these very beautiful artistic versions of books that we don't quite have in America to the same degree.
49:17
What's going on with that? Ooh.
49:20
I There's particularly with French and French-based companies, there's always been a incredible amount of of care and interest in the art of the book and the art of book making.
49:31
And they have an economics that works for them there.
49:35
There's, you know, I I I can't remember if they still have price stability of books, but they used to.
49:40
That helped keep prices up and kept some margins higher for publishers so they could maybe invest more.
49:44
Don't know if they still have that or not, but historically that was part of the reason.
49:49
And I do think there's different aesthetics.
49:51
I mean, you go to the UK and the covers that they put on our books sometimes like I can't believe that's going to work. But you know what?
49:56
It works for their market. It absolutely does.
50:00
So, you know, I'm not going to be so arrogant say well, you don't know what you're doing.
50:03
You got to use my my jacket.
50:04
That's part of the what the publisher has.
50:06
The publisher knows their market.
50:07
How do they make that book work for their market?
50:09
So, it it's different sensibilities and I don't know.
50:11
I mean, a lot of people I've heard people say Americans are loud and in your face.
50:14
I don't know if it's true or not.
50:19
I would like maybe more true than I would like to admit, you know. Um tell me about AI.
50:24
Uh you know, I think that the once again, I might not be terrible, but I'm trying to be uncharitable.
50:30
I'm trying to be provocative here.
50:31
But it seems like it seems like the party line is AI is bad. Don't use it.
50:39
And it's then also humans are always going to be better than AI.
50:44
There's something special about the human in the publishing loop.
50:49
But also, if that's true, then why is there so much fear around it?
50:53
And like those two things don't quite logically work.
50:55
So, how do you respond to that?
50:58
There's so many things going on.
50:58
First of all, anything new people get scared of to begin with.
51:02
So, that's it's a human nature thing.
51:04
I think it's even more so in publishing.
51:06
We we've tend to be okay, let's wait and see approach and that's happened with with everything.
51:11
So, um I think that's what's happening with AI right now to starters.
51:16
We talked about outliers earlier.
51:16
If AI works on algorithms and basically predicting the next word that's going to happen, right?
51:21
That's what chatbots do and maybe with you know, with further advances and you know, it could it could change, but the outliers is where the beauty comes.
51:31
And I still think that outlier is a very human thing.
51:32
I mean, I I was a I was a Star Trek fan.
51:35
And there was this one episode where Data and Geordi were sitting there talking to each other and and Geordi was trying to explain to Data or Data was asking about, you know, I don't understand the expression a watched pot never boils.
51:45
He goes, "Whenever I watch it in 212°, it you know, it it boils in 1 minute 33 seconds every time."
51:52
And And Jordi says, "Turn off your internal chronometer."
51:56
And then it you know, you have that's human part of it.
51:58
I think that's going to continue in books.
51:59
Does that mean that we can't benefit from AI? Absolutely not.
52:02
We could we could absolutely benefit from AI.
52:04
One of the things that editors and you know, and it usually falls on the junior folks, the assistants, they hate writing tip sheets. No one likes it.
52:12
>> Writing tip Tip sheets.
52:12
It's a summary of the author, the general specs of the book, the author's demographic background, and maybe a quick summary of the book.
52:22
And it's it's either a TI sheet, a tip sheet, a sell sheet.
52:24
It's what we need to populate our database with the book information and what the sales people get to sort of set them up to sell the book.
52:33
And it has BISAC on it as well, which is a code that we use to describe genre and and subgenre.
52:38
It's something that's used throughout the industry. Tell me more.
52:42
Uh BISAC, it's it's literally just uh I don't even know how many hundreds of codes there are.
52:45
There's literally hundreds of codes that you'll you'll get you know, you'll have one code that'll be like romance and you'll get you know, gay paranormal romance could be one subcategory or you know, uh you know, realistic, you know, romance could be another category.
52:59
So, we have numbers that are assigned to it to help, you know, catalog the books and help identify, you know, what what they are, the genre. >> Cool. Back to AI. Yeah.
53:06
So, back to AI for two things.
53:09
One, the the tip sheet, first draft of the tip sheet could absolutely be created by AI.
53:14
And then have a human go in and fine-tune it.
53:19
Also, you may have and so, metadata is another thing.
53:22
When we put a book up online to sell, there's a bunch of keywords, a bunch of information that we're doing there to try to raise it up in in algorithms.
53:28
AI might be better at that than us.
53:31
Um it doesn't remove the human element, but it absolutely gives you a good first draft and maybe even a good second draft.
53:39
And then to have AI regularly monitor what's working.
53:44
So, the keywords that work today might not work a year from now.
53:48
So, we talk about that back catalog again.
53:49
Maybe AI could tweak those those keywords so the book can get more discoverability down the road.
53:53
These are all things that we're not doing now.
53:57
It's not going to take anyone's job away, and that's another fear.
53:58
People think, "Oh, it's going to take my job away."
54:02
I don't I don't I think there's a better chance The line goes, you know, it's a better chance that you lose your job to someone who understands AI than you lose it to AI.
54:08
Because it's just another tool.
54:10
I mean, we don't have the typewriter we grab the lever and swing it across anymore.
54:13
I mean, some people use it, but we don't.
54:15
We use we use word processors.
54:16
I think that's what AI could be.
54:18
Now, at its worst, it could be bad.
54:21
But, almost any innovation at its worst could be bad. And I I'm I don't know.
54:23
I don't I guess I'm probably more of an optimist than I than I tend to admit.
54:29
And I think this is going to be a a tool that can empower us to spend more time on the human aspects, the strategic aspects, the fun aspects of what we do.
54:38
And, you know, that's that's good.
54:38
Let me give you a thought experiment, and I want to hear your response from three different sides of who you are. >> Okay.
54:45
The the creative, the business guy, Yeah. and the lawyer. Okay. So, here I am. I'm giving you a book. I've just finished it.
54:53
And let's assume it is a fantastic book.
54:55
Like, it is a top 1% book.
54:58
And you say, "Did you use AI to write this?"
55:01
And I said, "AI wrote the first draft.
55:04
Um I went in after, and I followed what AI said.
55:07
I had directed AI to do this, but AI's hands are absolutely all over it.
55:12
And actually, Gemini, Claude, ChatGPT, I cited it as my co-writer." What do you say? Oh my god.
55:21
This is the hardest question I think I've been asked.
55:24
>> [laughter] >> So, creative person.
55:25
Creative, business, lawyer.
55:27
I want to hear from all three.
55:29
>> So, the creative person would be like I think that I'd have very mixed feelings as a creative person.
55:33
I'd be like, you know, part of me might think you cheated. Mhm.
55:39
>> Part of me might might think that, you know, if you're citing the AI as a co-author, that's that's that's so so much so that, you know, really is this you or is it is this from someone else?
55:51
You know, that would be the creative point of view.
55:53
The business person and the legal would be very similar, actually, because the first thing is it's very fundamental, it's very basic.
56:00
Our copyright law does not protect things created by AI. Mhm.
56:03
So, if it's been created by AI, you do not own it at McMillan. >> No one can own it.
56:09
It's not it's not subject to to to copyright protection.
56:10
So, now as a businessman, I going to invest in something that has zero barrier to entry.
56:17
If I publish that book tomorrow and it's deemed not to be covered by copyright, everyone else can publish a different version of that book.
56:22
And at what level is it not copied by copyright?
56:24
Like in page 297, I redid the third word in sentence 21 on that versus this was written by AI chat GPT.
56:33
>> Well, this is there's no there's no clear line for this. And that's the problem.
56:36
You know, there's a there's a test and I I just honestly can't remember what the phrase is, but it's along the lines of, you know, substantially created by a human.
56:42
You know, the the uh copyright only protects works that are I think it's substantially created by human, but you you can't hold me on it.
56:51
I got to get the the exact information, but there's a test and it's not a bright line.
56:54
So then, if I come in and I'm going to work with you, do you have to basically look me in the eye at this point and say, "Did AI write this? How How did you use AI?"
57:04
Well, we we've had we've had um in our contracts forever and I don't think this is different for most publishers that were any publishing contract I've ever seen, where it's you make the author makes a representation that the work is their sole creation.
57:17
And they and then they're they're they're they they make a representation that they will identify any parts aren't.
57:21
So, here's a perfect example.
57:23
There are plenty of books that might have a song lyric or might cite someone else's book.
57:25
You know, part of the editor's job is to, you know, identify those, but really it's the author's job to say, "Hey, I quoted so-and-so here.
57:33
And for fiction as well, right? You've seen it.
57:35
So this hasn't changed and I mean I've been in working for publishing companies for the last 25 years.
57:39
I've been in the entertainment business, you know, for the last, you know, 35 years.
57:45
This is no different than it's ever been.
57:47
So then back to our thought experiment.
57:48
So now I'm sitting down, I'm going to write a book.
57:50
John, give me some advice. I'm going to use AI. I want to use AI.
57:54
Um how should I be working with AI?
57:57
How should I be tracking?
57:57
Do I need to be tracking all the AI that I use?
58:01
Like how do I do this in a ethical way that speaks to your creative side, the business side, the legal side?
58:06
I think it goes back a little bit to what we were just talking about a couple minutes about.
58:12
If you use it as a tool, Yeah.
58:12
you know, a great example would be a research assistant, right?
58:16
If you used AI as a research assistant, you said, "Look, I've read these 10 books and you had permission to dump them into AI, you know, cuz that's a whole other thing. And you then query.
58:25
You say, "Okay, my theme or what I'm trying to get across is this or I'm trying to get documentation or, you know, trying to annotate this thought."
58:35
AI could help you find that way quicker than having to read through all those books again.
58:38
That's a a fine use of AI, I think.
58:41
That's no different than being able to, you know, scan an ebook, right?
58:45
I would call that Google on steroids category.
58:46
I guess that's fair enough.
58:48
But so that to me is, you know, that's a that's a tool.
58:50
For fiction, it might be maybe it's a thought partner.
58:52
Maybe it's like, "Hey, here's my manuscript and then you can start querying the the cat by the say um you know, give me your your your two cents on this character development or something."
59:07
Maybe that's a a good example, but I don't know.
59:11
I haven't given this incredible amount of thought, but those are things that just come to mind about how you could use AI to maybe sort of as a tool.
59:19
What are the things that keep you up at night?
59:22
Like what is What do you like to think about in terms of hey, where's the industry going?
59:25
Here are the fault lines that it could go this way or that way.
59:28
Like two roads converge to like just go this way or that way.
59:31
Like what are you thinking about there?
59:32
Well, I I it's also what what's going to be the next romance genre?
59:35
What's the next big thing?
59:35
I mean, if you would have told me So, it's about content.
59:38
It's Yeah, that's the first thing, yeah.
59:39
If it's a If it's about If you would have told me 10 years ago that paranormal would be back, I would have been surprised, but it is. It's back now.
59:45
It just has a lot of romance in it, you know, a lot of sex in it.
59:48
Uh so, what what's old could be new again?
59:51
Um and what's that next thing going to be?
59:52
So, that's that's always a question for the industry.
59:54
And if you You don't always have to get there first, but it doesn't hurt, right?
59:57
And you have to make sure you get there.
59:59
You know, if we weren't doing romance at all, our business would look very different now.
1:00:02
We happen to be very good at it.
1:00:04
So, that's that's that's one thing.
1:00:06
There is no question that there is more connection we're having with data and information.
1:00:11
We talked about that earlier and we have limited access to data.
1:00:14
I think that's going to be changing more and more over time.
1:00:15
And how we use that is something that we have to get up to speed with and and figure out how to make it part of our business.
1:00:22
And you're seeing some folks out there doing a little bit more with it and it makes a difference.
1:00:25
So, that'll be something that I think is going to happen next in in publishing.
1:00:30
We talked about AI just a moment ago.
1:00:30
I think another place that AI could be really great for us is doing demand forecasting.
1:00:35
You know, we have to print these books.
1:00:37
We have to print them before we sell a single copy. Right.
1:00:40
>> And if we get that that number wrong, we're eating that cost and then those books get thrown away, which isn't great for the environment.
1:00:45
So, using AI and we've already started doing it, by the way, at Macmillan and we're and we've Last year alone, we estimated we printed 1 million fewer copies based on our use of AI and and and demand forecasting.
1:00:56
And that saves a lot of trees. Wow, how about that? >> Yeah.
1:00:58
Walk me through the print Like how do a printing center work Like I don't know that it seems like books get magically printed.
1:01:07
I guess all of these had to be printed.
1:01:09
Yeah, yeah, yeah, >> [laughter] >> exactly.
1:01:10
Like does Santa bring them every year?
1:01:12
Like gives them to to to Barnes & Noble? Like how does it work?
1:01:16
That's Santa's side hustle.
1:01:16
Right, bringing the books, right. We We edit the books.
1:01:20
The books get, you know, designed and then they go out to a printer to be printed and then we have there's facilities all over the country that we use to to print our books.
1:01:27
We have multiple companies that we work with.
1:01:31
We print some in Asia as well.
1:01:31
A lot of the four color stuff happens in Asia, some happens in Europe.
1:01:35
Four color the the picture books, the cookbooks, you know, any, you know, What do you say four color?
1:01:41
Does that mean because there's black, red, green, blue or something? Okay. Exactly. Exactly.
1:01:45
Whereas opposed to a novel which is one color.
1:01:46
Ah, now I get what you mean. Okay. Yeah.
1:01:49
So, um So, we we we print those books in various facilities of people we've had relationships obvious obviously for years in many cases.
1:01:55
They get shipped to our warehouse.
1:01:58
We have one warehouse in the US.
1:02:00
It's in Gordonsville, Virginia.
1:02:02
We've had that warehouse for over three decades now.
1:02:04
And then those books go from there to to retailers around the country, around the world actually.
1:02:08
Many retailers choose to use an intermediary to help organize their their books and organize their book section and you know, help them get books in packaged and delivered to them in a way that makes it easier for them to fill their shelves.
1:02:22
So, Readerlink plays that role for many mid-sized and regional um mass market stores and they do it for Target and Walmart for that matter.
1:02:31
Ingram's another distributor.
1:02:33
They they're historically been selling books to the independents.
1:02:37
They're also starting now to sell to Walmart as as well.
1:02:39
And again, we ship tractor trailer loads of books to these folks and then they get them out to to the retailer themselves.
1:02:47
Independents will use USPS or UPS or some other form of, you know, packaging.
1:02:53
Who should be self-publishing?
1:02:56
That's a really good question.
1:02:56
I mean, the easy answer is if you can't get a publishing deal, you should you should try self-publishing.
1:03:01
I think there's there's no easy answer because of this.
1:03:06
People Some people should start out self-publishing and when they have success, it probably makes sense for them to to come to us to do some of it.
1:03:13
It might not make sense for them ever to come to us. Right. It just depends.
1:03:17
More often than not, over time the self-published folks, there's a burden to doing self-publishing and none of them really get the print side you know, systematic. It's hard.
1:03:27
Doing ebooks, now even maybe doing audio, they could do that on their own.
1:03:32
But getting the print books and getting them into the stores, it's not an easy thing.
1:03:35
Cuz self-publishing as a percentage is way more ebooks than physical, right?
1:03:40
>> Uh I mean, it's like almost hardly any physical. Right.
1:03:43
>> Yeah, even even this like I was just looking at numbers for a super successful self-published author, well over 95% are ebooks. Wow. Yeah.
1:03:48
And for us on a bestselling fiction, you know, maybe 30% will be ebooks.
1:03:58
So then the pitch to like if I'm here and I'm a super boneheaded crank, like I got to go self-publish and you're like, "Okay, just hear me out.
1:04:07
The reason to work with a more traditional publisher is Well, there's a million reasons.
1:04:11
For starters, we're going to give you an advance.
1:04:13
So a lot of people can't give up their day job, they don't have the ability to work at night.
1:04:17
We're going to help finance you.
1:04:19
We're going to give you money up front so you can spend some time to get that book done.
1:04:23
Uh we have expertise in printing, we have expertise in marketing, we have expertise in distribution, we have expertise in editing and I think you know from listening to your show, the editing process matters. Yeah.
1:04:33
So you don't get that on your own.
1:04:35
Now you could you go out and hire a freelance editor, sure.
1:04:39
I'd say we got some pretty good ones, there's some pretty good freelance ones out there, too.
1:04:42
But all of that becomes part of a package that we're really good at.
1:04:45
And when you add all that up, I think it's a lot of value. Mhm. >> Mhm.
1:04:52
Tell me about the marketing and how has the what matters in marketing changed?
1:04:57
You know, like there's a book about David Foster Wallace that I really love and it became a movie I think called The End of the Tour and the whole premise of the book is that he's going to give different speaking talks in bookstores around the then going on radio shows.
1:05:15
I have a sneaking suspicion that's not the best way to do marketing anymore.
1:05:18
James Clear when he published Atomic Habits went on like 78,000 podcasts in the first week, you know, recorded a bunch, had the embargo, boom.
1:05:24
And I'm not sure that's the best thing to do anymore.
1:05:29
What guidance do you have for authors doing marketing and how does it change based on their genre?
1:05:38
I'm not sure it changes based on genre.
1:05:40
I my approach to marketing and I put publicity and marketing in the same bundle here for this part of the conversation is you have to identify the community you're trying to reach. >> Huh.
1:05:48
And then my my line that I've been using for as long as I can remember is you identify that community and then you identify the the connectors, you the evangelists within that community and then you empower them to spread the gospel. Mhm.
1:06:01
>> You know, that's and that's that word of mouth.
1:06:02
That's the word >> 12 apostles. >> Right. Yeah.
1:06:04
And and that's how it So that to me that's how every campaign needs to start and there's also a great line, the best way to market figure out how to market a book is to read it.
1:06:10
The book will also tell you what are the hooks, what are the things that will be interesting to that community and then you have to go maximize that.
1:06:17
And the tactics are going to be different for every single book that you do.
1:06:20
But I think if you approach it from who's the audience and what's the best way to reach them and really reach the people in that community that can help spread the word for you, that's the way to get them the the most out of your your approach.
1:06:32
Who do you think's done a good job of this recently?
1:06:34
Well, we've done a great job at St.
1:06:36
Martin's Press and at at at Tor.
1:06:37
I think those are two examples.
1:06:39
Our entire company thinks this way about marketing at this point.
1:06:41
So I I name those two because they're two of our biggest imprints, but it's happening across of our entire organization.
1:06:45
across of our entire organization. This is how people approach marketing and you know, we're better on some books than we are at others and we get it right sometimes and sometimes we're not we're not quite as good, but I think also the
1:06:55
key now with with marketing is um quickly changing when you're doing something that's not working and we do get enough feedback that we can say, okay, that that ad campaign didn't work or maybe that that channel, that that area that we're targeting isn't delivering. Let's Let's pull off that
1:07:08
Let's Let's pull off that and spend our time somewhere else.
1:07:12
Tell me about marketing from your side of the house, which is, as I see it, you have a portfolio of books. >> Mhm.
1:07:18
Presumably, you have a budget, a marketing budget, and then what you need to do is ramp up and down what books you're going to prioritize based on that budget. Is that right? Yeah, pretty much.
1:07:30
I mean, we we we set a budget, and then the publisher, you know, and the publishers set the budget themselves.
1:07:35
We We give each publisher a marketing budget based on their projected revenue for the year, and then they decide where to spend it on.
1:07:41
And I think the general rule again and what one of my guiding principles are you spend money Marketing's about one thing. It's about ROI. Sure. It's all it is. All right?
1:07:51
So, where do you spend the extra time?
1:07:54
And I'm using time here because money, yes, it incredibly matters, but we can never get time back.
1:07:58
Maybe we If we overspend in one place, maybe I could find another thousand bucks to give them.
1:08:03
I can't get that day back. Right.
1:08:05
So, where where do we If we spend a disproportionate amount of time, where do we get a disproportionately good result?
1:08:12
That's how I think we That's how we think about the the exercise.
1:08:16
You have the private ownership in Germany, two two owners, and there presumably there's a demand for financial return, but also there's probably demand for cultural cachet, cultural impact.
1:08:28
How do you think about the trade-off between the tangible and quantifiable financial part of your job versus the intangible, unquantifiable culture part of your job?
1:08:40
I don't think about it as I don't I don't I just do it. Mhm.
1:08:42
And and I'll and I'll tell you So, here's the story that goes with that.
1:08:46
I was interviewing for my job to run the kids division, you know, fifteen and a half years ago.
1:08:51
And I said to to John Sargent, who was going to be my boss, who was interviewing me for the job, former CEO of Macmillan, I said, "John, look, I've worked in really big publicly traded companies.
1:08:59
I've worked in really small privately held companies.
1:09:01
I've never worked in a really big privately held company like, you know, Holt Spring / McMillan.
1:09:06
How do you measure success?
1:09:09
And he goes, "I'll give you the answer they gave me when I asked that same question when I was interviewing for my job."
1:09:13
And he said, "We got to make some money, but we never manage to the last nickel.
1:09:17
We got to win some awards.
1:09:17
We got to get on some best-seller lists.
1:09:20
And most importantly, we got to publish books that make a difference."
1:09:24
And the company's lived up to that every day that I've been there.
1:09:27
So, that is I think part of our DNA.
1:09:29
That's why there's people at McMillan for a long time. And we embody this.
1:09:30
And yeah, we can't just all we need a return.
1:09:35
It has to be a reasonable return.
1:09:36
They're not looking to squeeze every drop of juice out of the orange.
1:09:40
And we got to win some prizes.
1:09:40
And I think what everyone knows this and we're all feeling it.
1:09:47
It is part of our DNA at this point at the company.
1:09:48
And the newbies pick it up real quick. What do you do all day? I just put out fires. Really?
1:09:55
I mean, it seems like >> job pretty reactive?
1:09:57
It's more reactive than I would like.
1:09:59
I think that, you know, there's always something coming up.
1:10:02
And part of it part of it is reactive because they people do want me to be a sounding board.
1:10:07
So, and I I wouldn't change that for a second. So, I I like that.
1:10:08
So, a lot of it is reactive, but of course, we're setting the strategy, right?
1:10:12
We're saying, "Here's the things we want to accomplish for this year.
1:10:14
How are we going to go about doing it?"
1:10:16
And we're never draconian about it.
1:10:17
Like, what are the things you want to accomplish?
1:10:18
Well, I know I know I want to upgrade our tech.
1:10:21
You know, we have we have technology infrastructure that's a little dated.
1:10:24
So, I want to I want to update that.
1:10:25
I know that we we built, you know, Bramble over in our tour publishing group a couple of years ago.
1:10:32
What else could we be into that was to take advantage of Romancy? Yep.
1:10:33
What else can we be doing to do it?
1:10:35
I know we under index in business books.
1:10:37
How can we grow the the the business side of the business?
1:10:41
And everyone at the same time is what's the next trend going to be?
1:10:44
So, I'm having conversations around this all the time.
1:10:49
And how do you look for the next trend?
1:10:51
I wish I knew the answer to that.
1:10:51
You know, you keep your ear to the ground.
1:10:54
You you know, you have your editors that are out there saying, "Okay, here's what I'm seeing.
1:10:57
We're looking at some you know, I think monitoring self-publishing has been a good way to maybe see what's what's going to come next.
1:11:03
So, we're doing all these things.
1:11:06
You know, we're talking about the AI thing.
1:11:09
And I was I was going to go see the Gatsby musical this week.
1:11:13
So, I watched both the Gatsby movies, the Robert Redford one, the DiCaprio one.
1:11:17
I've never seen the DiCaprio one.
1:11:21
I've seen I've seen the Redford one many times, yeah. >> It's fun. It's fun.
1:11:23
Uh there's strengths to both.
1:11:25
And um because of this, I I was on the road and I was going to have to listen to the Great Gatsby audiobook.
1:11:35
So, I'm in an Uber in Santa Monica and I I buy the the audiobook and it says, "This has been an automated Great Gatsby audiobook, you know, edited for clarity and stuff like that." And I was like, "F that. I am so out."
1:11:47
Like, I don't care how good the audiobook telling is.
1:11:50
I'm going to listen to a human being.
1:11:54
And how do you think about AI audiobooks?
1:11:59
How do you think about guest audiobooks in terms of a performer coming on versus the author, "You, David, you got to read this one."
1:12:07
I mean, I think there's there's so many parts that I think for for memoir, it's really important when the author reads it. Is it Is it required?
1:12:14
No, but particularly celebrity memoir, to have someone else telling you that person's story, I think it's a little rough.
1:12:20
There's been examples of where it worked, but I mean, we we published Jeremy Renner's memoir last year, that story about how he basically died on his driveway.
1:12:27
And hear him tell it, I I don't know how he got through it, let alone, you know, how powerful it was. So, that's huge.
1:12:33
I mean, to you know, it's we did Matthew Perry's memoir, you know, unfortunately, he passed, but he read that.
1:12:41
And what was neat about that, I read that one.
1:12:43
I went back and listened to it later, but when he when I read this book, I'm like, it sounds like he's sitting on the couch just telling me a story. >> Yeah.
1:12:51
And then when you in the audiobook, he is.
1:12:52
audiobook, he is. So, that kind of stuff I think it's really important if the if the author you know and even you know we did Careless People last year which was the meta whistleblower and she is not an actor and her audiobook won awards and she did an incredible incredible job
1:13:07
reading it and the audio is the form and they're they're selling great both physical and audio but the audio is really holding on at a very high level and you know she was the first time she ever did an audiobook in her life but it's her story she wanted to tell it and it made a great difference. I think that matters. For fiction, I I think that matters.
1:13:21
For fiction, I think it you don't need the author to to read fiction.
1:13:25
In fact, there's a skill there that you might want a professional narrator.
1:13:29
>> Oh, I just watched this video of the guy who did the Lord of the Rings audiobook and he gets into um all the different voices and you just watch him and it is mesmerizing.
1:13:41
>> Yeah, it's incredible.
1:13:41
These folks are and audio book the audiobook today is so different than what it was 20 years ago.
1:13:47
I mean it's they're they're so incredible these narrators.
1:13:49
I just listened to um to My Husband's Wife.
1:13:53
It's Alice Feeney's new book that we published last month and you know she's having an incredible start to the year because of Netflix show.
1:13:59
>> My Husband's Wife is the name of the book.
1:14:00
Okay, I was very confused.
1:14:00
My Husband's Wife is the name of the book. Yeah.
1:14:04
And it's a it's a good one and it's a multi-voiced narration and you know so it's it's it's part of the show.
1:14:11
So, I think there's those are great elements.
1:14:13
Could there be a world where it makes sense for a an AI narrator?
1:14:17
I could see instances where that matters where that >> comes into play too.
1:14:20
I think on the The Great Gatsby, I think it's public domain now.
1:14:23
So, someone just did it you know did a cheat. I I believe it.
1:14:24
So, and to make it happen but you know there's a lot of people also we had a great instance where we had a backlist title back catalog like we talked before where we we did it I don't know 10 15 years ago.
1:14:37
The narrator was his voice wasn't the same anymore and we wanted to the author wanted to redo a section of the book.
1:14:44
So, we had AI you know, clone the voice from the original recording and do that section.
1:14:51
And we got some blowback for it, but I think that's a complete And everyone we didn't hide it.
1:14:55
And that was a I think that's a great use of AI for it.
1:14:57
And the other piece is it's expensive to make audiobooks.
1:14:59
And there's a bunch of books that we publish that never find their way to audio.
1:15:03
If we could come up with a high-quality audio to get those books out in the world, that's not a bad idea.
1:15:08
And if they start taking off, who knows?
1:15:10
Maybe we'll re-record it with a human.
1:15:13
So, I think there's there's elements there for across the board for how you approach audio.
1:15:16
I want to talk about literacy.
1:15:18
And I feel like there's two kinds of literacy.
1:15:19
The first is there is the measure of just how many people can read.
1:15:25
So, like how many people can look at a book and read what's going on.
1:15:28
That's like, "Hey, you know, you need to be literate."
1:15:30
I'm actually less interested in talk about that.
1:15:31
I want to talk about the other kind of literacy, which is basically like I've a friend who is a college professor.
1:15:37
And he's been teaching I think he's been teaching there for 25 years.
1:15:41
And he said with pretty high conviction, he said, "Me" He said he's a humanities professor.
1:15:46
"Me and all my colleagues, we feel like people have gotten less literate in that way.
1:15:52
Their ability to read deeply, to analyze a text, to focus.
1:15:55
Frankly, I feel like I've gotten less literate over the last 10 years.
1:16:00
Like I've become super distracted by smartphones and all that.
1:16:04
I'm not proud of it, but I think it's true.
1:16:05
And what do you make of that culturally and then also for the future of the publishing industry?
1:16:10
Like if people struggle with attention span, maybe they're not going to be buying books like they used to.
1:16:16
I think that's a it's it's a a very real fear.
1:16:18
And it's particularly acute in kids.
1:16:23
You know, you're getting kids in that third and fourth grade age when the time you want them to become independent readers and to really enjoy reading saying they're not reading at all.
1:16:32
Saying they don't like reading.
1:16:32
And you know, stereotypically a lot of boys used to be that way, but now we're getting it with girls, too. Wow.
1:16:37
And the data is showing that uh boys and girls are reading less, they're both saying that they like reading less, and it's way worse for boys, but it's happening with girls, too.
1:16:48
And I think that's existential.
1:16:48
If for for many reasons, but particularly for in our publishing world, if kids don't read today, the chance of them growing up into adult readers, it's it's less.
1:16:58
Also, it has a huge impact on our society.
1:17:00
There's no better way to become to get develop analytical skills, develop reasoning, to be able to discern, you know, what's going on in your life than reading.
1:17:12
So, and and also a lot of research over the years shown kids that don't read at grade level by, you know, call it third, fourth grade in the US, that they have they're less successful in life than people that do. So, what's going on?
1:17:23
We're seeing this decline of literacy on one side, and I feel like the data's pretty clear on that that people are reading less, but also it seems like the book publishing industry is growing.
1:17:32
If I want to understand the publishing industry better, what books should I read?
1:17:35
What journals, publications should I be looking at?
1:17:37
How does one go about understanding what's going on here?
1:17:40
You know, I I used to get this question about the music industry, I got a little bit about film, I just touch film like by an instance, but I I don't think there's a great one-stop shop to get that answer.
1:17:49
I think the best thing to do is, you know, immerse yourself in the culture, immerse yourself in the trade, you know, grab some trade, you know, look at Publishers Lunch, look at Publishers Weekly, see what people are talking about, and figure out a way to to build yourself into the community.
1:18:01
Go to organizations, if you're a writer, you know, SCBWI is a is a is a great organization.
1:18:07
Um you know, the AAP has outreach occasionally, you know, the the Children's Book Council has outreach.
1:18:14
These are all ways that you can try to bring yourself into the into the sort of the ecosystem.
1:18:20
Do you think about your portfolio like venture capital, in that there's just going to be most of them aren't going to be hits, but then the ones that work are going to be so successful that they make up for all the others?
1:18:32
Not exactly, but there is a truth to that.
1:18:34
I mean, the the big hits do carry a lot of weight and we don't build our list for that.
1:18:39
We're We're not We're not going out and buying, you know, spending huge money on, you know, on the list hoping that one, you know, that one out of 10 works.
1:18:49
But, there's a truth that the the top books do carry a lot of weight. Yeah. Yeah.
1:18:54
But, you know, if if I the ecosystem isn't such cuz the wins aren't, even when they're really big, they're not still big enough to to cover, you know, 90% losses if you're paying the same amount for all those books.
1:19:03
Where in the venture capital world, you you could probably pull that off.
1:19:08
Okay, one of the vibes I've sort of gotten from this is just really tough to make money in publishing.
1:19:11
So, you've been in business forever.
1:19:14
Like, how do you make money?
1:19:16
Where is the Where's that coming from?
1:19:18
You, you know, we have a cattle back catalog, that helps.
1:19:23
We we >> That's higher margins.
1:19:25
That's higher margins and all Yeah.
1:19:26
And we also we we we pick good.
1:19:29
You know, we we pick more winners than losers.
1:19:32
We pick, you know, and that's the nasty way to say it, but we pick books We have a good track record at picking books that that work.
1:19:40
Um other people might have a different history, I don't know.
1:19:42
And the backlist does help, you know?
1:19:44
So, when you're buying these back catalogs that you talked about earlier, you're buying in a little bit of um hedge against risk.
1:19:53
Is the market for back catalog pretty efficient? Well, which market?
1:19:56
Just for back catalog novels, children's books.
1:19:59
I mean, it seems like there's only five or six buyers who would buy in terms of the big publishing house.
1:20:07
>> Oh, you mean in terms of acquiring a company? >> Yeah, exactly.
1:20:09
Or buying the rights to Roald Dahl or Where the Wild Things Are.
1:20:15
Like, do you feel like that's an efficient market?
1:20:16
Well, it's it's just different cuz the the the way our our our publishing deals work in the US generally is that the publisher has the the the rights for the term of copyright. It's a really long time.
1:20:26
So, these catalogs are not coming on the market that often. And that's a 100 years.
1:20:33
It's It's life of the author plus Is it 100 years now? I can't remember.
1:20:36
Oh, life of the author plus time. For Yes. Yeah. Wow.
1:20:40
Yeah, so when people look to buy something, they're buying companies and part of the the calculation is what is their backlist delivering.
1:20:46
You're not And every once in a while a catalog does come up.
1:20:51
There's There's provisions in the copyright law that allow for a reversion of rights to the author and then those catalogs come up and people go after them and we we've bought some often times they stay with the original publisher for for technical reasons that make it easier for that to happen, but it's uh you're buying companies.
1:21:07
You're not Those catalogs don't come on the market as oh, here's some you know, Maurice Sendak's backlist.
1:21:12
It you know, that that's not something that happens regularly.
1:21:17
All right, last question.
1:21:19
Um Macmillan, talk about Macmillan, how it's differentiated inside of the industry, the kinds of authors that you're looking for, and then also if I'm writing fiction, children's books, non-fiction, like who do I call to get in the door like, "Hey, I got a great book that's what you're looking for."
1:21:35
>> got to get that agent.
1:21:35
Remember, you got to get that agent to get in the door.
1:21:38
>> [laughter] >> Yeah, so tell me about that.
1:21:38
So, tell me about Macmillan and then I guess I got to get the agent, right? Right. Yeah.
1:21:43
So, a couple things about Macmillan.
1:21:43
I think what's really neat We have eight publishing divisions including our audio division.
1:21:47
So, seven publishing seven divisions that are publishing new books day-to-day.
1:21:51
Our audio division actually does do some audio originals as well.
1:21:55
And what's really neat and I think the competitive advantage for us is the personalities of all those imprints are very, very different.
1:22:01
So, we might get two or three or sometimes even four or five of our companies competing for the same book, but the book will look really different depending on who gets it.
1:22:10
And in fact, you know, once once the books get to a certain level, they got to come to me for approval for the for the advance.
1:22:17
And So, that's like half a million or more.
1:22:20
>> I'm not telling you what the number is, but it's a number. [laughter] So.
1:22:24
So, once they they come to me, they'll they'll send me an email, "Here's our pitch, John.
1:22:27
This is why we think we want, you know, this many dollars for the book.
1:22:31
Sometimes I get the email and I'm like, I thought this is the same book as the other one, but it sounds so different.
1:22:36
And I'll read through the emails and it is the same book, but they're the pitch is so different.
1:22:39
And I think that's a competitive advantage cuz I think that some of our competitors are a little bit more homogeneous in how they approach their publishing.
1:22:47
So, with us, you have multiple stops that you can go to get a different point of view and a different take on your book.
1:22:52
And the other thing that's real interesting is they value books very differently.
1:22:56
So, publisher A for me might think, oh, I want 300,000 for this book.
1:23:01
And someone else might say they want 500,000.
1:23:02
Now, I don't go back and tell each other what they're doing, but if someone asked me for 200 and someone else asked me five, I'll tell the person that asked for two, you're probably not going to get it at two.
1:23:12
And they know that means that someone else is asking me for way more money.
1:23:15
And they always it's never not happened. Those I don't care.
1:23:17
This is what I think it's worth.
1:23:19
And I know that doesn't happen in other places.
1:23:21
So, our people have the strength of their convictions, they have a vision for the book, and I think that that gives us a really great competitive advantages.
1:23:27
So, you have different personalities.
1:23:29
So, when you come to McMillan or you have your agent come to McMillan, they have different places, they have different takes on the book, and it gives you multiple chances to get in our door.
1:23:38
So, when I think about McMillan and what separates us also, I I talk about this with the with the the company at large at almost every company meeting.
1:23:44
I say, when people hear McMillan, I want them to think McMillan, that's the place to be. And what does that mean?
1:23:50
It means that if we're the place to be, our authors like us and they want to bring all their books to us and their agents want to bring all their books to us.
1:23:56
It means the retailers think that we're good partners and they want to go out of their way to make our books work.
1:24:02
It means that the vendors that we work with, the printers, they'll go out of their way for us.
1:24:05
If we need that quick reprint, they'll go out of their way to work for work with us to make that happen.
1:24:09
It means our employees like working for us and everyone else wishes they could work for us.
1:24:13
And now when I'm going out to, you know, the London Book Fair in two weeks, or when I'm in Frankfurt the past October, people come up to me and they say, John, I'm hearing McMillan's the place to be."
1:24:21
That's what separates us.
1:24:23
And the last thing is I talk about this all the time and I again in in company meetings, I want people to have joy in their day.
1:24:28
I want people It's important.
1:24:30
We spend more time at work than we do doing anything else.
1:24:32
And if you have joy in your day, it makes the the mundane less mundane.
1:24:36
It makes the hard days less hard.
1:24:38
It makes the good days that much better.
1:24:40
And the quick story again about my grandfather, you know, uh I'd go to see him play all the time.
1:24:46
I'd go to clubs and he'd come off the bandstand and sometimes he'd say he'd say, "You see that drummer John?"
1:24:49
I said, "Yeah, pops, I saw the drummer."
1:24:51
He goes, "You see him looking at his watch?"
1:24:52
I said, "I saw him looking at his watch."
1:24:53
He goes, "If you're going to look at your watch when you're playing music, you need another job."
1:24:56
And if we could approximate some of that kind of, you know, love that my grandfather had for for music into our day-to-day, we're going to win. Yeah. Yeah.
1:25:06
That was That was really cool. Thank you. Thank you. Yeah.