Some believe in giving the people what they want. Some believe in getting the people to want what they’re given. It’s the job of the marketing department to bring these two forces together: getting producers to make what the consumers want, getting consumers to want what the producers make. The convergence happens at the checkout counter, where the commodity is exchanged for cash. When the gap is minimized between demand and supply, between desire and fulfillment, the transaction becomes all but inevitable — if the price is right. The up-front investment in design, production, warehousing, distribution, and marketing must be recouped in a sale price that the consumer is willing to pay.
What’s happened is that the investment function has come to dominate the marketplace. For the investors, the specific product isn’t particularly important. Investment decisions are driven by return on investment = revenue in excess of cost. In effect, ROI is the product that the company sells and the investor buys. If the ROI doesn’t satisfy the investors, then they take their money elsewhere and the company folds. And so top management focuses most of its attention not on satisfying the producers and consumers of the company’s product but on satisfying the company’s investors.
Of course I’m not just writing abstract economic musings here. Though I’ve been writing fiction for more than a decade, I’m a newcomer to the writing industry. Now, looking at the business side of things, I’m realizing that the publishing industry exemplifies many of the worst features of contemporary capitalism.
The designers of the product — the writers — are not employees of the manufacturer and distributor — the publishing company. The writers aren’t even paid short-term contractors. They are speculators, doing the work on their own time without compensation.
The writers’ speculative risks are not commensurately rewarded. As I wrote yesterday, the average published novel earns maybe $11K for the author — minimum wage at best. And most novels aren’t published, earning the author a zero ROI.
The literary agent, who sells the writer’s speculative work to the publisher, actually works not for the writer but for the publisher. In Hollywood, the agents work for the screenwriters, the directors, and the actors. Hollywood agents earn their commission as a percentage, typically 10% to 15%, of their clients’ earnings on the film or TV show. In New York, the writer’s agent works for the publisher. As I wrote yesterday, the agent collects a commission of 15% not on the author’s take but on the gross revenues generated by the book. I.e., the agent earns the same percentage that the author earns in royalties. So the literary agents’ primary financial incentive is to satisfy not the writers they represent but the publishers who sign their commission checks. It’s well recognized that, in the wake of corporate downsizing in the publishing industry, the literary agents’ main job is to screen and select commercially viable books on behalf of the publishers.
In Hollywood there is an actors’ guild, a directors’ guild, a screenwriters’ guild — labor unions that provide collective representation and bargaining power on behalf of the individual workers in negotiations with the corporate studios. There is no fiction writers’ guild — the literary writers are on their own as individuals, negotiating with corporate publishers and corporate agencies.
And that doesn’t even take into consideration the consumer/buyer/reader side of the transaction…