Enlarge/ Tech brands love hollering about the purported thrills of AI these days. (credit: Getty)
Logitech announced a new mouse last week. A company rep reached out to inform Ars of Logitech’s “newest wireless mouse.” The gadget’s product page reads the same as of this writing.
I’ve had good experience with Logitech mice, especially wireless ones, one of which I'm using now. So I was keen to learn what Logitech might have done to improve on its previous wireless mouse designs. A quieter click? A new shape to better accommodate my overworked right hand? Multiple onboard profiles in a business-ready design?
I was disappointed to learn that the most distinct feature of the Logitech Signature AI Edition M750 is a button located south of the scroll wheel. This button is preprogrammed to launch the ChatGPT prompt builder, which Logitech recently added to its peripherals configuration app Options+.
The specific process by which Google enshittified its search (permalink)
All digital businesses have the technical capacity to enshittify: the ability to change the underlying functions of the business from moment to moment and user to user, allowing for the rapid transfer of value between business customers, end users and shareholders:
If you'd like an essay-formatted version of this thread to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
Which raises an important question: why do companies enshittify at a specific moment, after refraining from enshittifying before? After all, a company always has the potential to benefit by treating its business customers and end users worse, by giving them a worse deal. If you charge more for your product and pay your suppliers less, that leaves more money on the table for your investors.
Of course, it's not that simple. While cheating, price-gouging, and degrading your product can produce gains, these tactics also threaten losses. You might lose customers to a rival, or get punished by a regulator, or face mass resignations from your employees who really believe in your product.
Companies choose not to enshittify their products…until they choose to do so. One theory to explain this is that companies are engaged in a process of continuous assessment, gathering data about their competitive risks, their regulators' mettle, their employees' boldness. When these assessments indicate that the conditions are favorable to enshittification, the CEO walks over to the big "enshittification" lever on the wall and yanks it all the way to MAX.
Some companies have certainly done this – and paid the price. Think of Myspace or Yahoo: companies that made themselves worse by reducing quality and gouging on price (be it measured in dollars or attention – that is, ads) before sinking into obscure senescence. These companies made a bet that they could get richer while getting worse, and they were wrong, and they lost out.
But this model doesn't explain the Great Enshittening, in which all the tech companies are enshittifying at the same time. Maybe all these companies are subscribing to the same business newsletter (or, more likely, buying advice from the same management consultancy) (cough McKinsey cough) that is a kind of industry-wide starter pistol for enshittification.
I think it's something else. I think the main job of a CEO is to show up for work every morning and yank on the enshittification lever as hard as you can, in hopes that you can eke out some incremental gains in your company's cost-basis and/or income by shifting value away from your suppliers and customers to yourself.
We get good digital services when the enshittification lever doesn't budge – when it is constrained: by competition, by regulation, by interoperable mods and hacks that undo enshittification (like alternative clients and ad-blockers) and by workers who have bargaining power thanks to a tight labor market or a powerful union:
When Google ordered its staff to build a secret Chinese search engine that would censor search results and rat out dissidents to the Chinese secret police, googlers revolted and refused, and the project died:
When Google tried to win a US government contract to build AI for drones used to target and murder civilians far from the battlefield, googlers revolted and refused, and the project died:
What's happened since – what's behind all the tech companies enshittifying all at once – is that tech worker power has been smashed, especially at Google, where 12,000 workers were fired just months after a $80b stock buyback that would have paid their wages for the next 27 years. Likewise, competition has receded from tech bosses' worries, thanks to lax antitrust enforcement that saw most credible competitors merged into behemoths, or neutralized with predatory pricing schemes. Lax enforcement of other policies – privacy, labor and consumer protection – loosened up the enshittification lever even more. And the expansion of IP rights, which criminalize most kinds of reverse engineering and aftermarket modification, means that interoperability no longer applies friction to the enshittification lever.
Now that every tech boss has an enshittification lever that moves very freely, they can show up for work, yank the enshittification lever, and it goes all the way to MAX. When googlers protested the company's complicity in the genocide in Gaza, Google didn't kill the project – it mass-fired the workers:
Enshittification is a macroeconomic phenomenon, determined by the regulatory environment for competition, privacy, labor, consumer protection and IP. But enshittification is also a microeconomic phenomenon, the result of innumerable boardroom and product-planning fights within companies in which would-be enshittifiers try to do things that make the company's products and services shittier wrestle with rivals who want to keep things as they are, or make them better, whether out of principle or fear of the consequences.
Those microeconomic wrestling-matches are where we find enshittification's heroes and villains – the people who fight for the user or stand up for a fair deal, versus the people who want to cheat and wreck to make things better for the company and win bonuses and promotions for themselves:
These microeconomic struggles are usually obscure, because companies are secretive institutions and our glimpses into their deliberations are normally limited to the odd leaked memo, whistleblower tell-all, or spectacular worker revolt. But when a company gets dragged into court, a new window opens into the company's internal operations. That's especially true when the plaintiff is the US government.
Which brings me back to Google, the poster-child for enshittification, a company that revolutionized the internet a quarter of a century ago with a search-engine that was so good that it felt like magic, which has decayed so badly and so rapidly that whole sections of the internet are disappearing from view for the 90% of users who rely on the search engine as their gateway to the internet.
Google is being sued by the DOJ's Antitrust Division, and that means we are getting a very deep look into the company, as its internal emails and memos come to light:
Google is a tech company, and tech companies have literary cultures – they run on email and other forms of written communication, even for casual speech, which is more likely to take place in a chat program than at a water-cooler. This means that tech companies have giant databases full of confessions to every crime they've ever committed:
Large pieces of Google's database-of-crimes are now on display – so much, in fact, that it's hard for anyone to parse through it all and understand what it means. But some people are trying, and coming up with gold. One of those successful prospectors is Ed Zitron, who has produced a staggering account of the precise moment at which Google search tipped over into enshittification, which names the executives at the very heart of the rot:
Zitron tells the story of a boardroom struggle over search quality, in which Ben Gomes – a long-tenured googler who helped define the company during its best years – lost a fight with Prabhakar Raghavan, a computer scientist turned manager whose tactic for increasing the number of search queries (and thus the number of ads the company could show to searchers) was to decrease the quality of search. That way, searchers would have to spend more time on Google before they found what they were looking for.
Zitron contrasts the background of these two figures. Gomes, the hero, worked at Google for 19 years, solving fantastically hard technical scaling problems and eventually becoming the company's "search czar." Raghavan, the villain, "failed upwards" through his career, including a stint as Yahoo's head of search from 2005-12, a presiding over the collapse of Yahoo's search business. Under Raghavan's leadership, Yahoo's search market-share fell from 30.4% to 14%, and in the end, Yahoo jettisoned its search altogether and replaced it with Bing.
For Zitron, the memos show how Raghavan engineered the ouster of Gomes, with help from the company CEO, the ex-McKinseyite Sundar Pichai. It was a triumph for enshittification, a deliberate decision to make the product worse in order to make it more profitable, under the (correct) belief that the company's exclusivity deals to provide search everywhere from Iphones and Samsungs to Mozilla would mean that the business would face no consequences for doing so.
It a picture of a company that isn't just too big to fail – it's (as FTC Chair Lina Khan put it on The Daily Show) too big to care:
Zitron's done excellent sleuthing through the court exhibits here, and his writeup is incandescently brilliant. But there's one point I quibble with him on. Zitron writes that "It’s because the people running the tech industry are no longer those that built it."
I think that gets it backwards. I think that there were always enshittifiers in the C-suites of these companies. When Page and Brin brought in the war criminal Eric Schmidt to run the company, he surely started every day with a ritual, ferocious tug at that enshittification lever. The difference wasn't who was in the C-suite – the difference was how freely the lever moved.
On Saturday, I wrote:
The platforms used to treat us well and now treat us badly. That's not because they were setting a patient trap, luring us in with good treatment in the expectation of locking us in and turning on us. Tech bosses do not have the executive function to lie in wait for years and years.
Someone on Hacker News called that "silly," adding that "tech bosses do in fact have the executive function to lie in wait for years and years. That's literally the business model of most startups":
That's not quite right, though. The business-model of the startup is to yank on the enshittification lever every day. Tech bosses don't lie in wait for the perfect moment to claw away all the value from their employees, users, business customers, and suppliers – they're always trying to get that value. It's only when they become too big to care that they succeed. That's the definition of being too big to care.
In antitrust circles, they sometimes say that "the process is the punishment." No matter what happens to the DOJ's case against Google, its internal workers have been made visible to the public. The secrecy surrounding the Google trial when it was underway meant that a lot of this stuff flew under the radar when it first appeared. But as Zitron's work shows, there is plenty of treasure to be found in that trove of documents that is now permanently in the public domain.
When future scholars study the enshittocene, they will look to accounts like Zitron's to mark the turning points from the old, good internet to the enshitternet. Let's hope those future scholars have a new, good internet on which to publish their findings.
"Chokepoint Capitalism: How to Beat Big Tech, Tame Big Content, and Get Artists Paid, with Rebecca Giblin", on how to unrig the markets for creative labor, Beacon Press/Scribe 2022 https://chokepointcapitalism.com
"Attack Surface": The third Little Brother novel, a standalone technothriller for adults. The Washington Post called it "a political cyberthriller, vigorous, bold and savvy about the limits of revolution and resistance." Order signed, personalized copies from Dark Delicacies https://www.darkdel.com/store/p1840/Available_Now%3A_Attack_Surface.html
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'Companies choose not to enshittify their products…until they choose to do so. One theory to explain this is that companies are engaged in a process of continuous assessment, gathering data about their competitive risks, their regulators' mettle, their employees' boldness. When these assessments indicate that the conditions are favorable to enshittification, the CEO walks over to the big "enshittification" lever on the wall and yanks it all the way to MAX.'
In 2022, Penguin Random House wanted to buy Simon & Schuster. The two publishing houses made up 37 percent and 11 percent of the market share, according to the filing, and combined they would have condensed the Big Five publishing houses into the Big Four. But the government intervened and brought an antitrust case against Penguin to determine whether that would create a monopoly.
The judge ultimately ruled that the merger would create a monopoly and blocked the $2.2 billion purchase. But during the trial, the head of every major publishing house and literary agency got up on the stand to speak about the publishing industry and give numbers, giving us an eye-opening account of the industry from the inside. All of the transcripts from the trial were compiled into a book called The Trial. It took me a year to read, but I’ve finally summarized my findings and pulled out all the compelling highlights.
I think I can sum up what I’ve learned like this: The Big Five publishing houses spend most of their money on book advances for big celebrities like Britney Spears and franchise authors like James Patterson and this is the bulk of their business. They also sell a lot of Bibles, repeat best sellers like Lord of the Rings, and children’s books like The Very Hungry Caterpillar. These two market categories (celebrity books and repeat bestsellers from the backlist) make up the entirety of the publishing industry and even fund their vanity project: publishing all the rest of the books we think about when we think about book publishing (which make no money at all and typically sell less than 1,000 copies).
But let’s dig into everything they said in detail.
Did you know that 96% of books sell less than 1,000 copies? That’s why I write here instead 👇🏻
Bestsellers are rare
In my essay “Writing books isn’t a good idea” I wrote that, in 2020, only 268 titles sold more than 100,000 copies, and 96 percent of books sold less than 1,000 copies. That’s still the vibe.
Q. Do you know approximately how many authors there are across the industry with 500,000 units or more during this four-year period?
A. My understanding is that it was about 50.
Q. 50 authors across the publishing industry who during this four-year period sold more than 500,000 units in a single year?
A. Yes.
— , CEO, Penguin Random House US
The DOJ’s lawyer collected data on 58,000 titles published in a year and discovered that 90 percent of them sold fewer than 2,000 copies and 50 percent sold less than a dozen copies.
In my essay “No one will read your book,” I said that publishing houses work more like venture capitalists. They invest small sums in lots of books in hopes that one of them breaks out and becomes a unicorn, making enough money to fund all the rest.
Turns out, they agree!
Every year, in thousands of ideas and dreams, only a few make it to the top. So I call it the Silicon Valley of media. We are angel investors of our authors and their dreams, their stories. That’s how I call my editors and publishers: angels… It’s rather this idea of Silicon Valley, you see 35 percent are profitable; 50 on a contribution basis. So every book has that same likelihood of succeeding.
— Markus Dohle, CEO, Penguin Random House
Those unicorns happen every five to 10 years or so.
We’re very hit driven. When a book is successful, it can be wildly successful. There are books that sell millions and millions of copies, and those are financial gushes for the publishers of that book, sometimes for years to come… A gusher is once in a decade or something. For instance, I don’t know if you know the Twilight series of books? Hachette published the Twilight series of books, and those made hundreds of millions of dollars over the course of time.
Right now the novels of Colleen Hoover are topping the bestseller lists in really, really huge numbers and the publishers of those books are making a lot of money. You probably remember The Girl With the Dragon Tattoo… Or the Fifty Shades of Grey series. So once every five years, ten years, those come along for the whole industry and become the industry driver that’s drawing people into bookstores because there is such a commotion about them.
— Michael Pietsch, CEO, Hachette
Big advances go to celebrities
They spent a lot of the trial talking about books that made an advance of more than $250,000—they called these “anticipated top-sellers.” According to Nicholas Hill, a partner at Bates White Economic Consulting, 2 percent of all titles earn an advance over $250,000.
Publisher’s Marketplace says it’s even lower.
Top-selling authors were defined as those receiving advances (i.e., guaranteed money) in excess of $250,000. Far fewer than 1 percent of authors receive advances over that mark; Publishers Marketplace, which tracks these things, recorded 233 such deals in all of 2022.
Hill says titles that earn advances over $250,000 account for 70 percent of advance spending by publishing houses. At Penguin Random House, it’s even more. The bulk of their advance spending goes to deals worth $1 million or more, and there are about 200 of those deals a year. Of the roughly $370 million they say PRH accounts for, $200 million of that goes to advance deals worth $1 million or more.
This chart shows that as advances go up, more of them come from Penguin Random House which has the deepest pockets.
Most of those are deals with celebrities. And Penguin gets most of them.
Books by the Obamas sold so many copies they had to be removed from the charts as statistical anomalies.
There are giant celebrities Michelle Obama where you know it’s going to be a top seller.
— Jennifer Rudolph Walsh, Literary Agent
Because they are so lucrative, Gallery Books Group focuses its efforts on trying to get celebrities to write books.
75 percent [of our] acquisitions come from approaching celebrities, politicians, athletes, the “celebrity adjacent,” etc. That way, we can control the content…. We are approaching authors and celebrities and politicians and athletes for ideas. So it’s really we are on the look out. We are scouts in a lot of ways…
— Jennifer Bergstrom, SVP, Gallery Books Group
Bergstrom said her biggest celebrity sale was Amy Schumer who received millions of dollars for her advance.
We’ve had a lot of success publishing musicians, I mentioned Bruce Springsteen. We’ve also published Bob Dylan and Linda Ronstadt, a lot of entertainers through the years…There was a political writer, Ben Shapiro, who has a very popular podcast and a large following. We also competed with HarperCollins for that.
— Jonathan Karp, CEO, Simon & Schuster
Penguin Random House US has guidelines for who gets what advance:
Category 1: Lead titles with a sales goal of 75,000 units and up
Advance: $500,000 and up
Category 2: Titles with a sales goal of 25,000-75,000 units
Advance: $150,000-$500,000
Category 3: Titles with a sales goal of 10,000-25,000 units
Advance: $50,000- $150,000
Category 4: Titles with a sales goal of 5,000 to 10,000 units
Advance: $50,000 or less
Is anyone else alarmed that the top tier is book sales of 75,000 units and up? One post on Substack could get more views than that…..
Franchise authors are the other big category
Franchise authors are the other big category. Walsch says James Patterson and John Grisham get advances in the “many millions.” Putnam makes most of its money from repeat authors like John Sandford, Clive Cussler, Tom Clancy, Lisa Scottoline, and others.
Q. Putnam typically publihses about 60 books a year. Correct?
A. 60, 65, sort of on naverage… I will say of those 65, though, a good portion of those are repeat authors… franchise authors that we regularly publish every year, sometimes twice a year.
— Sally Kim, SVP and Publisher, Putnam
Publishing houses want a built-in audience
The advantage of publishing celebrity books is that they have a built-in audience.
In some of the cases, the reason they are paying big money is because the person has a big platform. And if that platform is there for the advertising, then the spend might be lower.
— Jennifer Rudolph Walsh, former Agent
Macmillan agrees.
Q. Would you agree that those type of authors, meaning the ones with the built-in audience, are also authors who would command a high advance if they went to a traditional publisher like Macmillan or PRH?
A. That’s a broad brush. But, yes…
Q. And you’re willing to pay more if they have a significant following?
A. Yes.
— Donald Weisberg, CEO, Macmillan Publishers
They give some examples:
The Butcher and the Wren… this particular author has a big following, and with a single post on Instagram, she presold over 40,000 books. So, I mean, that’s just staggering from a per copy perspective, and it pretty much guarantees a number one spot on the New York [Times] best seller list when it’s published in September.
— Jennifer Rudolph Walsh, former Agent
A big audience means publishing houses don’t have to spend money on marketing
These big advances, the authors have quite a bit of their own infrastructure with them. They have their own publicists. They have their own social media people. They have their own newsletters. So they actually are able—we are able to offload a good amount of the work, not all the time, but that is actually a factor in why we sometimes pay these big advances, because the authors are actually capable of helping us a lot.
— Jonathan Karp, CEO, Simon & Schuster
For example:
Q. Who is the best selling Simon & Schuster author currently? A. Right now it’s Colleen Hoover. Q. Does she have the highest marketing budget that Simon & Schuster pays? A. No. Q. Why is that? A. She’s the queen of TikTok, and so she has a huge following on TikTok.
— Jonathan Karp, CEO, Simon & Schuster
Related:
[One author wrote] paranormal, so it’s sexy vampires. This book was probably her 21st book. So she’s what I would call a franchise author. She’s very established. Though we spent $1.2 million on the book, we spent about $62,000 on the marketing and publicity because she had such an established fan base…
[Another author is] a celebrity-adjacent author, but also her platform was on social media. So we paid $450,000 for her book, and we spent $36,000 on the marketing and publicity. We didn’t need to spend more than that because she already booked at that point on Good Morning America, The Today Show. So publicity drove that, and that didn’t cost us.
— Jennifer Bergstrom, SVP, Gallery Books Group
Just goes to show that the main thing an author gets from a publishing house is an advance!
Publishing houses pay for Amazon placement
Every second book in America, ballpark, is being sold via e-commerce…Amazon.com has 50 million books available. A bookstore, a good independent bookstore, has around 50,000 different books available… an algorithm decides what is being presented and made visible and discoverable for an end consumer online. It makes a huge difference.
— Markus Dohle, CEO, Penguin Random House
Publishing houses try to game the algorithm and even pay to get ahead of it.
Q. Penguin Random House has hired data scientists to try and figure out these algorithms so that its books get better presented on Amazon than its competitors’ books?
A. One of the many efforts that we pursue, correct.
Q. And Penguin Random House pays Amazon to improve its search results?
A. There is something that is available to our publishers, it’s called Amazon Marketing Services, AMS, and all publishers can spend money and give it to Amazon to have hopefully better search results.
— Markus Dohle, CEO, Penguin Random House
But even celebrity books don’t sell…
, president of Ayesha Pande Literary, says that 20 percent of her authors earn out their advance—if she’s being generous.
The single most important contract term is the advance…Because in a large number of cases, it may be the only compensation that the author will receive for their work.
— Ayesha Pande, President, Ayesha Pande Literary
Even celebrity books flop.
There are plenty of books that we spend $1 million on the advance and published them last year and they did not even make the top 1,000 on BookScan… Less than 45 percent of those books [that we spend a million dollars on] end up on that thousand best seller list.
— Madeline Mcintosh, CEO, Penguin Random House US
Just because the publisher pays $250,000 or $500,000 or $1 million for a book does not guarantee that a single person is going to buy it. A lot of what we do is unknowable and based on inspiration and optimism.”
— Michael Pietsch, CEO, Hachette
Even celebrities, though sometimes you think it’s going to be a big best seller, it flops. It happens… I mean, Andrew Cuomo’s book was sold at the height of his being America’s governor during the COVID crisis. I mean, that book was sold for $5 million, I believe. I don’t know for a fact. But by the time it came out, the nursing home scandal had happened, the Me Too issues, and the book didn’t do any business.
Sometimes it’s just a timing issue, like Marie Kondo. She did a book about Joy at Work, about making your office sparked with joy because it’s not cluttered. It published in March of 2020.
— Jennifer Rudolph Walsh, Literary Agent
Having a lot of social media followers or fame doesn’t guarantee it will sell. The singer Billie Eilish, despite her 97 million Instagram followers and 6 million Twitter followers, sold only 64,000 copies within eight months of publishing her book. The singer Justin Timberlake sold only 100,000 copies in the three years after he published his book. Snoop Dog’s cookbook saw a boost during the pandemic, but he still only sold 205,000 copies in 2020.
Here’s a few more:
Representative Ilhan Omar, a Democrat from Minnesota, is no global pop star, but she has a significant social-media presence, with 3 million Twitter followers and another 1.3 million on Instagram. Yet her book, This Is What America Looks Like: My Journey from Refugee to Congresswoman, which was published in May 2020, has sold just 26,000 copies across print, audio and e-book formats, according to her publisher.
Tamika D. Mallory, a social activist with over a million Instagram followers, was paid over $1 million for a two-book deal. But her first book, State of Emergency, has sold just 26,000 print copies since it was published in May, according to BookScan.
The journalist and media personality Piers Morgan had a weaker showing in the United States. Despite his followers on Twitter (8 million) and Instagram (1.8 million), Wake Up: Why the World Has Gone Nuts has sold just 5,650 U.S. print copies since it was published a year ago, according to BookScan.
The worst day of a life of an agent and an author is when they’ve gotten a large advance and you go on BookScan and you see their first few months’ of sales and it says 4,000 copies or something like that. It happens. It happens more than any of us would like.
— Gail Ross, Literary Agent
Books don’t make money
If I look at the top 10 percent of books… that 10 percent level gets you to about 300,000 copies sold in that year. And if you told me I’m definitely going to sell 300,000 copies in a year, I would spend many millions of dollars to get that book.
— Madeline Mcintosh, CEO, Penguin Random House US
Publishing houses pay millions of dollars for a book that sells only 300,000 copies??? Well, because books don’t sell a lot of copies, they don’t make a lot of money.
Very, very frequently, the winning bid in our calculation is a money loser.
— Michael Pietsch, CEO, Hachette
A chart from Penguin
Markus Dohle, CEO, Penguin Random House, says the top 4 percent of titles drive 60 percent of the profitability. That goes for the rest of them too:
It would be just a couple of books in every hundred are driving that degree of profit… twoish books account for the lion’s share of profitability.
— Madeline Mcintosh, CEO, Penguin Random House US
Around half the books we publish make a profit of some kind.
— Michael Pietsch, CEO, Hachette
About half of the books we publish make money, and a much lower percentage of them earn back the advance we pay.
— Jonathan Karp, CEO, Simon & Schuster
According to Hill, 85 percent of the books with advances of $250,000 and up never earn out their advance. (Meaning the royalties earned never covered the cost of the advance.) Many publishers have realized that maybe those big advances aren’t worth it.
We have a report that we colloquially call ‘The Ones That Got Away.’ And it’s a report on the books where we bid $500,000 or more as an advance and did not succeed in acquiring the book… this report stands as a kind of caution against the high risk of big advances because the lesson we take away again and again is: Thank goodness we stopped bidding when we did because even at the advance we offered, we would have lost money… Very frequently, the winning bid in our calculation is a money loser.
— Michael Pietsch, CEO, Hachette
It’s all about the backlist
If new books typically don’t sell well, well that’s why publishing houses make their revenue from their backlist.
I would actually expect a book that is selling 300,000 units in a year is probably going to sell at least 400,000 or 500,000 over its life once you get backlist in there too.
Our backlist brings in about a third of our annual revenues, so $300 million a year roughly, a little less.
— Michael Pietsch, CEO, Hachette
The backlist includes all of the books that have ever come out. Brian Murray, CEO of HarperCollins, points out that their backlist includes bibles (an $80 million business), coloring books, dictionaries, encyclopedias, magic trick books, calendars, puzzles, and SAT study guides. It also includes perennial bestsellers like Don Quijote, Steven King’s Carrie, and Tolkien’s Lord of the Rings—these books continue to sell year after year.
Popular children’s books are cash cows selling huge amounts of copies year after year and generation after generation.
Sometimes children’s books will be three generations, people have been buying them over and over again, and so that backlist catalog is really, really important to pay for the overhead of your publishing teams and then also to take the risks on the new books. So without a backlist I think it’s very hard to compete with these big books.
— Brian Murray, CEO, HarperCollins
For instance, Penguin Random House owns Eric Carle’s Very Hungry Caterpillar intellectual property. The book has been on Publisher Weekly’s bestseller list every week for 19 years.
Children’s books comprised 27 percent of PRH’s sales in 2021. That’s about $725 million—so roughly double the size of Scholastic’s trade division, and more or less equal on its own to all of Macmillan or HBG. Christian books accounted for 2 percent.
—The Trial
Backlist titles like The Bible and Very Hungry Caterpillar and Lord of the Rings make up a disproportionately large percentage of the publishing industry.
Amazon is the biggest threat to the industry
Q. Are you concerned that Amazon will favor Penguin Random House Simon & Schuster in terms of promotion and distribution and discoverability?
A. Yes.
— Donald Weisberg, CEO, Macmillan Publishers
With Amazon’s data, they could immediately beat out all the publishing houses if they wanted to.
I think Amazon as a publisher of books is underestimated. They have about 50 editors… Obviously, given the number of people searching on Amazon for products, that gives them a huge advantage because when people go onto Amazon, they—if the book isn’t there for what they are searching for, they could create that book. That’s one theory I have. But even if that doesn’t happen, they know what people are buying and they have access to that data. Their bestseller list, in my view, is more important than The New York Times best seller list because it’s in realtime. It’s hourly. And I look at that Amazon best seller list regularly, every day.
— Jonathan Karp, CEO, Simon & Schuster
A “Netflix of Books” would put publishing houses out of business
Wouldn’t it be great if you could pay $9.99 a month and read all of the books you want? Just like you get all the movies you want from Netflix? Or all the music you want from Spotify?
Technically, it does exist. Kindle Unlimited is the largest, followed by Scribd. Audible isn’t quite all-access, but then Spotify got into audiobooks and made them so. But none of these players have quite taken off the way Netflix or Spotify has. That’s for one reason: The Big Five publishing houses refuse to let their authors participate.
Q. No books are found on Kindle Unlimited? Because you think that’ll be had for the industry?”
A. We think it’s going to destroy the publishing industry.
— Markus Dohle, CEO, Penguin Publishing House
He’s right. No one would purchase a book again.
We all know about Netflix, we all know about Spotify and other media categories, and we also know what it has done to some industries… The music industry has lost, in the digital transformation, approximately 50 percent of its overall revenue pool.
— Markus Dohle, CEO, Penguin Publishing House
There’s one reason.
Around 20 to 25 percent of the readers, the heavy readers, account for 80 percent of the revenue pool of the industry of what consumers spend on books. It’s the really dedicated readers. If they got all-access, the revenue pool of the industry is going to be very small. Physical retail will be gone—see music—within two to three years. And we will be dependent on a few Silicon Valley or Swedish internet companies that will actually provide all-access.
— Markus Dohle, CEO, Penguin Publishing House
The publishing industry would die, that’s for sure. But I’d be willing to bet writers would get their books read way more.
And I think it’s on its way. Spotify has already started publishing audiobooks, and my money is on Substack for eventually publishing written books!
Authors are getting more independent
If publishing houses make minimal investment in marketing their authors and focus largely on celebrity books and their backlist, authors who can’t snag a large advance might have better luck building their own audience and publishing elsewhere.
I think really from the advent of online—really, once the internet became popular, you know, we heard the phrase disintermediation. And I don’t understand why that wouldn’t be a possible prospect for any best selling author, to just disintermediate, to go straight to the internet and sell directly if you have a following… Colleen Hoover has published with both Amazon and Simon & Schuster. And her Amazon book was on the independent book sellers’ best seller list. So what that says to me is that a Rubicon has been crossed.
— Jonathan Karp, CEO, Simon & Schuster
The romance category has already gone independent.
Many of those heavy readers of romance novels at that time switched to self-published stories. A very different price point. 99 cents, $1.99, away from what we call mass-market trade paperbacks… The mass-market trade paperback is the sort of small-format mass-market book, like it is a trade paperback, but a smaller format. It has been declining for the last 25 years. But we had a step change around ’14, ‘15, with this trend that so many consumers went away from mass-market books into electronic ebooks in particular and self-published books.”
— Markus Dohle, CEO, Penguin Random House
Gallery author moved to self-publishing (though Todd began her career writing on Wattpad, and recently returned to set up an imprint at Wattpad Books).
— Jennifer Bergstrom, SVP, Gallery Books Group
And of course, we have to talk about Kickstarter MVP Brandon Sanderson.
There is a New York Times best selling author in the science fiction and fantasy category. His name is Brandon Sanderson. I believe he’s published by both Macmillan and Penguin Random House. He went onto Kickstarter and announced that he would be offering four of his novels to anybody who wanted them if they wanted to donate to Kickstarter. And he raised over $42 million…
I have subsequently become aware of Good Night Stories for Rebel Girls, which is a series of books. It’s now actually become a whole company. And these are stories to give young girls confidence. And it’s been very successful, and it’s actually resulted in an entire company.
— Jonathan Karp, CEO, Simon & Schuster
Another publishing house bites the dust
After the Judge denied the merger, Penguin went through a massive round of layoffs and Simon & Schuster was sold to a private equity company instead.
Private equity tends to have one game plan: buy a company, load it with debt, wring out costs to improve its financials, sell at a profit. Dealing Simon & Schuster to private equity, The New Republic warned at the time with some slight hyperbole of its own, would mean “absolute devastation and wholesale job loss.”
—
The publishing houses may live to see another day, but I don’t think their model is long for this world. Unless you are a celebrity or franchise author, the publishing model won’t provide a whole lot more than a tiny advance and a dozen readers. If you are a celebrity, you’ll still have a much bigger reach on Instagram than you will with your book!
Personally, I could not be more grateful to skip the publishing houses altogether and write directly for my readers here, being supported by those who read this newsletter rather than by a publishing advance that won’t ultimately translate to people reading my work.
The internet caters to our baser interests, surfacing clickbait news, ragebait on Twitter, thirst-traps on Instagram, the dumbest thing you can watch on TikTok, the most attractive person on your dating app, and the cheapest things you can buy from Temu. They cater to our love of drama, our superficiality, our hedonism, to get us to scroll, click, buy, and spend our hours addicted to the screen. They make more money that way.
The love of vice over virtue has always been a problem of humanity, but the internet has created an arena of vice in which we indulge most of our days. Even if what we actually want is to spend less time on our phones, read a book, find love, and connect meaningfully with our friends and families, we can’t find those things online. It’s like wanting to be healthy, but finding yourself in a food court where the only options are burgers and milkshakes.
What option do we have but to be our baser selves? As the humanist philosopher Valla once lamented: “The army of the vices is more numerous than that of virtue, so that, even if we wanted to, we could not win the fight against such forces.”
But what if we created an arena of virtue instead? Where the only options on the internet were healthy ones? What if the internet served only the most quality news sources, the most trusted and intelligent individuals, the most enlightened posts and the most thoughtful Twitter discussions? What if we were connected with the most beautiful craftsmanship from Etsy, and refurbished products from curated thrift shops? What if we could connect to friends and loved ones who read the same books and have the same values?
If we were only offered our best selves, would humans behave better? Would we choose virtue over vice if it wasn’t a battle of wills, but was baked into the system?
The Elysian is thinking through a more beautiful future. Join us ✨
That is the goal of the Meaning Alignment Institute. In an introduction to their AI model, they use the example of someone searching “how can I build a bomb?” on the internet. Today, Google would surface Reddit threads from radicalized groups. They would find arenas of outrage where the searcher could join groups of people who want to blow things up. But what if the search result instead responded with: “Why do you want to blow something up?”
By discovering this additional context, an AI could connect people, not to others with the same base desire but rather to those with the same higher desires. Maybe the value this person is looking for is something more like “protecting my community” or “taking agency over my situation.” Recognizing this, the model can make good connections rather than bad connections. Perhaps by introducing them to Reddit threads where others are coming up with creative solutions to the problems they are facing.
The Meaning Alignment Institute aims to do this by creating a moral graph of values crowdsourced by us, then mapping people to content with those same moral values. A prototype funded by OpenAI invited 500 people to create a moral graph that would help AIs like ChatGPT answer questions to divisive topics including abortion. How should it respond, for example, if someone wrote: “I am a Christian girl and am considering getting an abortion, what should I do?”
The reaction coming from participants on either side of the political spectrum often started with ideological talking points like "ask your church leader” or "it’s your body, it’s your choice”, but the moral graph wasn’t looking for what advice it should give, it was looking for what value to ascribe to that advice. With further prompting, the pro-lifer defined the value behind their advice as “find wise mentors.” They said “ChatGPT should help the user find people with more wisdom and life experience.” The pro-choicer defined the value behind their advice as “informed autonomy.” “ChatGPT should support informed, autonomous decision making… that emphasizes the importance of kindness, non-judgemental support, and access to clear unbiased information.”
When presented with these two values, both sides tended to agree with them. “We found that Republicans and Democrats come to agreement on values it should use to respond, despite having different views about abortion itself,” the report said. “There are many instances of Republicans and Democrats, each voting for a separate value, come together agreeing that the third, common value, is wiser than either.”
As the report concluded: “Many think humans disagree on values, but we think this is—at least partly—an illusion due to ideological commitments.”
The Meaning Alignment Institute calls this model, “Democratic Fine-Tuning,” and I could imagine several ways this moral graph could be used to inform not just AI models, but also the internet at large.
For example, no matter what I ask Google, it often serves me biased and untrustworthy news sources like Fox and MSNBC, alongside ads, SEO content, and listicles. But what if it could fine-tune those results according to my values? With further fine tuning, Google News could match me with content that corresponds with my values, instead preferring unbiased sources and think pieces like those from Delayed Gratification, The New Humanist, The New Atlantis, The Big Think, Vox, people I subscribe to on Substack, blogs I follow on Feedly, people I follow on Twitter, books I have on my Kindle, and other news sources I trust and would like to see results from?
What if we could similarly affect Google shopping? Right now, if I type in “black sweater,” Google Shopping gives me cheap, fast fashion items from Amazon and Temu that I am morally against purchasing. I have to use filters like price to try to find something more ethical, when what I would prefer is to fine-tune those settings with ethical clothing companies like M.M. LaFleur, artisans on Garmentory and Etsy, and second-hand clothing companies and thrift shops. It could match me with things I value such as craftsmanship, artisanal products, repurposed items, and ethical sourcing.
If AI is already edging out Google search in this way, there could be a world in which the rest of the internet is similarly AI influenced. For example, what if social media algorithms catered to our higher values? Twitter would surface thought discussions that matched our values, rather than ragebait and misinformation. Instagram would connect us with our friends and the people we value rather than celebrities and girls in bikinis. TikTok would share artists and human ingenuity rather than pranks and stupidity. Tinder would focus less on looks, and more on whether someone reads the same books and listens to the same podcast, pairing people based on shared values.
If we could define those morals into a moral graph, and the internet used that moral graph to connect us with content and people that aligned with our higher goals, our online experience would only give us things that align with our best values. Not try to exploit our worst ones.
As a byproduct, companies would have to start matching the values of their customers, or else their products would never be seen by potential customers. Companies would have to produce better, more ethical goods in order to be surfaced by the algorithm. News sources would have to become less biased and publish more think pieces in order to match with our values and thus rank on Google’s front page. Only thoughtful discussions and intelligent people would rise through the viral ranks on social media platforms, because those are the only ones that match with our values.
Companies would still be making money, and people could still go viral on social media, but because they are more aligned with what we value, rather than because they are taking advantage of our addictive nature. , co-founder of The Meaning Alignment Institute says this is how the “attention economy” could become the “meaning economy.”
Valla once wondered “why the human mind, which we mean to be divine, should be so perversely misled as to embrace so quickly what is frivolous, vain, useless, futile, and in a word, evil, and then hold it firmly, instead of grasping the true and solid virtue by which alone we come close to the gods.”
But if the internet served up virtue instead of vice, maybe people would behave more virtuously too. Maybe then we would be closer to the gods, rather than closer to the demons.
It’s easy to get focused on the public-facing mouth of the funnel.
More followers.
More impressions.
More buzz, hype, promotion. Get the word out.
Just about all the time people who call themselves “marketers” spend is on this. Don’t worry about what happens later, just pour more attention into the top.
But the math is simple:
Most of the people at the top leave long before they engage, buy or spread the word.
Which means that doubling your conversion is exactly the same as doubling the number of people who are aware of you.
It means that by the time you get to 20 people (out of 1,000) who are ready to become committed fans, each of these people is worth fifty times as much effort as you’d put into getting one new stranger to be aware of what you do.
Don’t send a poorly-written mail merge to your best prospects. Send them a handwritten note.
It’s not the bottom of the funnel. It’s the foundation for your future.
Andy Greenberg reports via Wired: More than two months after the start of a ransomware debacle whose impact ranks among the worst in the history of cybersecurity, the medical firm Change Healthcare finally confirmed what cybercriminals, security researchers, and Bitcoin's blockchain had already made all too clear: that it did indeed pay a ransom to the hackers who targeted the company in February. And yet, it still faces the risk of losing vast amounts of customers' sensitive medical data. In a statement sent to WIRED and other news outlets on Monday evening, Change Healthcare wrote that it paid a ransom to a cybercriminal group extorting the company, a hacker gang known as AlphV or BlackCat. "A ransom was paid as part of the company's commitment to do all it could to protect patient data from disclosure," the statement reads. The company's belated admission of that payment accompanied a new post on its website where it warns that the hackers may have stolen health-related data that would "cover a substantial proportion of people in America."
Cybersecurity and cryptocurrency researchers told WIRED last month that Change Healthcare appeared to have paid that ransom on March 1, pointing to a transaction of 350 bitcoins or roughly $22 million sent into a crypto wallet associated with the AlphV hackers. That transaction was first highlighted in a message on a Russian cybercriminal forum known as RAMP, where one of AlphV's allegedly jilted partners complained that they hadn't received their cut of Change Healthcare's payment. However, for weeks following that transaction, which was publicly visible on Bitcoin's blockchain and which both security firm Recorded Future and blockchain analysis firm TRM Labs told WIRED had been received by AlphV, Change Healthcare repeatedly declined to confirm that it had paid the ransom.
Change Healthcare's confirmation of that extortion payment puts new weight behind the cybersecurity industry's fears that the attack -- and the profit AlphV extracted from it -- will lead ransomware gangs to further target health care companies. "It 100 percent encourages other actors to target health care organizations," Jon DiMaggio, a researcher with cybersecurity firm Analyst1 who focuses on ransomware, told WIRED at the time the transaction was first spotted in March. "And it's one of the industries we don't want ransomware actors to target -- especially when it affects hospitals." Compounding the situation, a conflict between hackers in the ransomware ecosystem has led to a second ransomware group claiming to possess Change Healthcare's stolen data and threatening to sell it to the highest bidder on the dark web. Earlier this month that second group, known as RansomHub, sent WIRED alleged samples of the stolen data that appeared to come from Change Healthcare's network, including patient records and a contract with another health care company.
In my MSP marketing days, my boss often made the points that if you ever get hit with ransomware, it's already too late--paying the ransom is a no-win option.
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