6

EXTREME PUBLISHING

I arrived at the New York offices of ‘Olympic’, a large publishing corporation, at 9:40 on a Wednesday morning in March 2007, well in advance of the meeting that was scheduled with the CEO at 10:00. In the management offices on the top floor of this towering office block in midtown Manhattan, the CEO’s personal assistant kindly offered me a cup of coffee while I waited. Just before 10:00, she ushered me into the CEO’s office, warning me to watch out for the step as I entered. I looked down and noticed a mat on the floor with the words ‘Mind the Gap’ woven into it. As I greeted the CEO and shook her hand, I commented light-heartedly on the mat. ‘I like the mat. You must’ve picked that up in London,’ I said, thinking that she must have bought it as a souvenir of the London underground and courteously placed it at the entrance to her office in order to call attention to a step that could easily trip up an unwary visitor. ‘Oh no,’ she laughed, ‘that has nothing to do with London. The gap is what we live with every day around here.’ ‘Really?’ I said. ‘Tell me about the gap – I’ve never heard this before.’ And so began my initiation into the budgetary finances of large publishing corporations.

Minding the gap

‘Well, so what happens, is this,’ she continued. ‘It’s June, and every publisher in the company says, “OK, what’s coming in for next year?” – they lay it out.’ They look at what is in the pipeline for the next year and they estimate the likely sales of each book on a title-by-title basis. Then they add it all up and it gives them X amount of sales. Senior management then amalgamates all these figures, takes account of costs and produces a draft budget for the coming year – let’s say it’s $800 million of revenue with a profit of 8 per cent. The CEO then takes this draft budget to the corporate bosses in the parent corporation and they say, ‘That’s fine, but you’re planning to do $800 million this year. Next year we want $800 million plus 10 per cent.’ And that extra 10 per cent of revenue is the gap: it’s the difference between what the publishers think they will sell on the basis of the books that are in the pipeline for next year, on the one hand, and what the corporate bosses say the company has to achieve, on the other. ‘My expectation’, explained the CEO, ‘comes from what [the parent corporation] tells me I have to do.’

By September the size of the gap for the coming year will be clear, and the task of the CEO and other senior managers will then be to divvy it out among the publishers – ‘to apportion misery’, as one former CEO of another house put it. In a corporation of this size the gap could easily be $100 million. If there are, say, six divisions and six publishers in the corporation, then each of these publishers will be assigned a share of the $100 million gap. Usually it’s not divided up equally – some publishers might be expected to do more to fill the gap than others, simply because they are more likely to publish the kinds of books that are good for filling gaps. There might be some to-ing and fro-ing (‘discussions that are not negotiations’) but the allocation of gap-filling targets is essentially a top-down process. Once each publisher has been assigned a target for the coming year, they have to focus a great deal of effort on trying to meet it. They may talk with some of their editors and urge them to go out and find potential gap-filling books, or to come up with ideas for books that could help to meet the target they’ve been assigned. Progress against this target is monitored carefully at all levels of the organization, both by the publishers and by the CEO and other senior managers: in the world of corporate publishing, this is what ‘minding the gap’ means.

So how do publishers set about trying to meet the gap-filling target? ‘They find books,’ explained the CEO curtly. But remember that it is now September, and the revenue gap must be filled before December of the following year, which means that the publishers only have six to eight months to find the books that will enable them to meet their share of the gap-filling target. So ‘they have to find books that are finished or can be finished in a quick amount of time, can be published quickly, fast to market. That means a book that is easy to define, easy to sell and easy to communicate.’ It can’t be too complicated because the gap-filling book – or ‘instant book’, as one publisher aptly termed it – will, in all likelihood, be published outside of the normal publishing cycle. It will probably have missed the seasonal catalogue in which it would normally be expected to appear; it might even have missed the sales cycle in which it would normally have been presented to buyers. Almost everything about the gap-filling book is abnormal, exceptional. It is an add-on to the normal publishing cycles and schedules. ‘This company has in fact perfected what we call “extreme publishing”,’ continued the CEO. ‘What it is basically is this: it’s adding books into the process that are not normal.’

So, for example, in April of any given year, this company will have a sales conference for which they have a seasonal catalogue and in which the sales reps will be told about the books that will be published in the fall, right up to January. The reps will then go out and sell these books to the buyers at the key accounts and at the independents, ‘so by the end of May the world will think they know what we are publishing till January. But they know already that they don’t know, because we will add books right up until September.’ Obviously it’s desirable for the publishers to try to find the gap-filling books as early as possible, once they’ve been told what their target is, so the period from September to March will be particularly important in the quest to fill the gap. But the search will go on right into the summer – though the later the book is acquired, the more pressure it will place on the publisher’s systems and schedules in terms of getting the book out before December. In practice, a parallel set of systems has to be created that will enable these crucial gap-filling add-ons to be published in a very short time-period – not just produced, but also marketed and sold. ‘We’ve created a system whereby our sales people have a way of communicating with accounts and getting orders fed back in. We’ve developed a way of adding these books into production. We’ve perfected a whole way of doing it, because these books are out of cycle,’ the CEO explained. ‘So a financial necessity has in fact become a publishing advantage.’ Olympic has become known in the trade as a publisher who is able to move books through the system very quickly and to bypass the normal publishing cycles. It has become known, and its senior managers are proud to think of it, as a publisher who excels in the art of extreme publishing.

Not every kind of book lends itself to extreme publishing. In fiction you can’t do it, unless it’s one of your repeaters who is delivering a new book ahead of schedule that you can rush through in order to ship it before the end of the year. ‘But if you have an author you’re making, you have to take the time – if you don’t take the time, it won’t happen. So everybody knows there are different rhythms. You can’t do it for every book,’ explained the CEO. Extreme publishing works particularly well with certain kinds of non-fiction books: celebrity books, topical books, the ‘quirkier gift humour books’ and so on. It works with celebrity books because the author has the kind of name recognition that will enable the major accounts to sell the book without having to put much effort into it. ‘They don’t have to do anything. They put the book out, they make money. So for them, that’s ideal.’ If it’s the kind of celebrity book that will be of interest to the Christmas shopper and they can get the book into the major accounts by December, that’s even better. The reps will have to go to the accounts and explain that this is a late Christmas add-on which didn’t appear in the catalogue. ‘But you know, the accounts won’t care. They’ll be joyous to hear that we’re going to give them another book that they can sell well at Christmas.’ You can also do it with some topical books. ‘When 9/11 happened we had a book on Al-Qaida that was supposed to be publishing in the spring. We crashed it out and it became a huge bestseller.’ So the principal way of managing the gap is to acquire several major pieces of commercial non-fiction that are already written, or can be written quickly, and published fast.

She gives an example: a couple of years ago several of their imprints received a submission from an agent in March for the autobiography of a well-known celebrity. The book consisted mainly of four-colour pictures of the celebrity in question, with a minimal amount of text that was written tongue-in-cheek. ‘We thought, this woman’s going to have a two-second life so we said “We’ll publish this book in September.” Six months later, a four-colour book. We crashed the book. We added it in September, we sold 200,000 copies. That’s over $2 million of volume by the way for the end of that year. Turned out it kept on selling. Now it’s still selling in paperback because it turned out she didn’t have a half-life of six months which we thought. That’s a perfect example because everybody knows who she is, it was easy to add, you could say, “Here it is and here’s why it should be crashed.” Made sense, right? You want to get it while it’s hot, right?’

When it comes to the search for gap-filling books, the attention of publishers and editors is therefore naturally focused on big books. There is no point trying to close the gap with small and mid-list titles, since by this stage in the publishing cycle most lists will already have more than enough titles of this kind; there is no room to add more and, in any case, they would not generate the kinds of numbers you need to make a serious contribution to the gap-closing task. ‘The middle and the bottom of the list fills itself up naturally through the process of your editorial meetings,’ the CEO continued. ‘If you’ve got, say, five or six editors and they all buy five small books, suddenly you have 25 books, plus you have continuing authors who turn in their next book. So there’s a certain amount of the list that just comes naturally by the process of people working. What you’re looking for now is how to fill in your big ones.’ Some big books will be in the works already – new novels by some of your brand-name authors, some major non-fiction titles that were bought some while ago and are now coming to fruition, etc. But these books will already have been taken into account in the budgeting process, so they will not be available to you when it comes to filling the gap (unless you can speed up some other titles of this kind and ‘crash them out’ before the end of the year). So for the most part you will be obliged to look to your normal sources of supply – that is, the agents – for new big books that are already finished (or nearly so), or to come up with ideas for big books that can be put together quickly and fast-tracked through the systems of extreme publishing. And since all the large corporate publishers are in the same boat and are working to broadly similar schedules, the process of closing the gap tends inexorably to raise the stakes in the already overheated market for big books.

Buying new big books that can be published quickly is the best way to manage the gap but it’s not the only way. You can also try to squeeze more out of the books that are already in the pipeline by marketing them more aggressively and looking for ways to maximize their sales potential. If a book starts to sell well, you can push it harder and put more resources behind it in the hope that it will take off and sell beyond your initial budgeting expectations – for example, you can do extra advertising, you can extend the publicity tour, you can go back to your major accounts and say, ‘Look, Barnes & Noble have got a 50 per cent market share on this book – you’re missing out here,’ and so on. ‘You keep on re-promoting,’ explained one senior manager. ‘Really, so few books work, the trick is making the books which do work even bigger then they already are.’

While filling the gap accounts for perhaps only 10–15 per cent of the total revenue of the publishing corporation in any given year, it is a crucial 10–15 per cent – ‘crucial because you don’t make money till the end’, explained the CEO of Olympic. Once your overheads are fixed, you have to be able to drive additional revenue through the system in order to meet your financial targets – both top line and bottom line. ‘The main thing is the bottom – you’ve got to make the bottom line. But there’s nowhere else to make it except increased sales. You could be lucky and get a big subrights deal but in today’s world that’s very unlikely. So sales is the only place.’ If you can’t get the top-line growth, then either you’re going to fall short on the bottom line or you’re going to have to scramble to cut costs in order to try to rescue a margin under pressure. The incentive to close the gap is experienced by senior and middle managers as a corporate imperative, and in the more performance-oriented corporations their bonuses are tied to it, ‘and bonuses are a big portion of our salaries’.

So what are the downsides of extreme publishing? For the CEO of Olympic, the main danger is that, if you’re not careful, you can end up publishing things too quickly. ‘The danger is that you try to do it too quickly. That’s what you don’t want to do. What you want to do is schedule it right. That’s what [Olympic] has perfected – the scheduling of it.’ Are there other dangers? Might they be losing money on these books, given the extra costs that might be involved in acquiring them and rushing them through the systems? ‘We thought maybe we were losing money on add-ons because we were adding them on to make budget and were overspending, so a few years ago we did a whole study. One of the amazing things we discovered is that we made more money on our add-ons than we made on our regular books.’ So how did she explain that? ‘We decided it was because we were closer to market, so we actually knew what we were doing. So you said, “I’m going to sell 20,000 copies,” you sold 20,000 copies. Whereas when you buy from a proposal, the book comes in three years later. The public doesn’t care any more; the book’s not as good as you thought. With add-ons you’re often buying from finished manuscripts – it’s like a completely different animal. There’s an excitement to the fact that you do it and then boom, you have a book in short order.’

So no worries there. What about quality? Is there a danger that many of the books published as add-ons might be rather poor books for which you tend to overpay and then rush through simply in order to meet the budgetary demands imposed on the organization by the parent corporation? ‘I don’t have a lot of sympathy for that,’ replied the CEO. ‘I’ve always been of the school that publishing is a business; people give you money to do it and they deserve to get their money back. So this idea that the corporatization of publishing makes it dirty has always annoyed me.’ She concedes that the practice of extreme publishing stems from financial demands that are external to the publishing house and imposed on it by its corporate owners, but she rejects the suggestion that this, in and by itself, leads to bad publishing – ‘It all depends on your judgement going into it.’ You can overpay for a book that you’re buying to fill the gap and you can overpay for a book that you’re planning to publish in two or three years’ time – either way you can lose a shedload of money, whether it’s extreme publishing or not. So the CEO of Olympic has no qualms about extreme publishing as such. ‘My only reservation is about whether I’m making good judgements, and sometimes my judgement is good and sometimes it’s bad. I’m perfectly willing to admit that.’

In search of the unknown

While Olympic has perfected the art of extreme publishing and turned necessity into a virtue, all the large publishing corporations experience similar pressures and proceed in broadly similar ways. They have all developed their own in-house jargon to describe the gap that arises every year, as sure as night follows day, between the sales they expect to achieve on the basis of their ground-up projections and the revenue targets that are handed down to them by their corporate bosses. ‘In this company they’re called “unknowns”,’ explained Jim, a publisher in another corporation across town. ‘I’ve worked in enough of these places and it’s the same everywhere. Every one of us is given a certain number of unknown, unbought titles that you have to find for the next fiscal year to be able to make your number.’ As a middle manager who’s saddled every year with the task of finding a certain number of unknowns, Jim takes a less sanguine view of this process than the CEO of Olympic.

Jim runs an imprint at one of the large publishing corporations. Every year he goes through the same budgeting exercise described by the CEO of Olympic, though modified in ways that are specific to his corporation. ‘We look at what we have in the pipeline. With our director of sales we budget them title by title in terms of what we can get out initially. We add all that up and we say, “OK, here’s the budget for next year.” And they say that’s not good enough. So they give us a higher number, and the way to get to the higher number is to say, “Now you have unknowns of 500,000 copies of a $25 hardcover book,” or whatever it might be. And then our task as a publisher is to whip the editors to find those books.’ Given the importance of unknowns for meeting the budgetary targets, the task of finding unknowns assumes a huge significance in the working lives of middle managers in the large corporations. ‘Every time I see my boss she will say to me, “Have you filled your unknowns yet?” or “Where are you filling your unknowns?” That’s all she cares about.’

Like all the publishers of the different imprints, Jim is under a lot of pressure to find unknowns. He searches himself, and he also puts pressure on his editors to search. How do they search? Where do they look? ‘You literally call an agent and say, “I need a book for next fall.” That’s basically it. We also think of ideas and think of people who we can go after and that kind of thing.’ Of course, since the agents know exactly what’s going on and understand the pressure that the publishers are under, they know that they’re in a strong bargaining position and can raise the stakes, or allow the stakes to be raised by letting publishers from different companies, all in a similar situation, compete against one another. ‘It really is cheque book publishing,’ explained Jim. ‘It definitely has an effect on the stakes and inflates the prices of things, because you have a short-term need.’

The need to fill the gap also exacerbates the inefficiencies that are built into the supply chain, ‘because the push is to ship a lot of books to make the short-term profit. It’s what you can ship in the fiscal year, not what you can sell.’ For the purposes of making budget, the key is to ship out as many as you can and record the sale before the end of the fiscal year, even if a substantial proportion of these eventually come back as returns. Jim explains: ‘The way the accounting is done in this business is that we operate on reserves: everything is reserved at a certain level. For next year that will be whatever we ship less 40 per cent. And then you deal with the returns in the following years, either on the plus side – you have a book that might sell through at 90 per cent, so you take back from the reserve – or on the negative side, you know, you have titles that you ship and they come back at 60 per cent, so at some point you have to recognize that extra 20 per cent.’ Since the reconciliation of returns is pushed into the future, managing the gap tends to create an incentive to ship out as many books as possible in order to maximize short-term revenue and short-term profit.

Desperate enthusiasm

The CEO of Jim’s corporation, ‘Galaxy’, worries about the pressure put on his publishers by the need to manage the gap (‘tremendous amount of pressure, yes’), but he also worries about the pressure put on senior management ‘to make sure these people [that is, the publishers and editors] don’t get so desperate’. If the search for unknowns begins around September, by March it is drawing to a close, since from March on it’s going to get harder and harder to buy books and get them published before the end of the year, however good your systems are. ‘So in a year when they were looking to buy this book as just another book in their list it would be worth this much. And now, as they’re getting closer to that March date, they start looking at this book that they wouldn’t have bought a year ago for that price – they might buy it now, saying, “What else am I going to have? Am I going to have nothing? Or I’ll have this.” So a sort of desperate enthusiasm takes over. They get so desperate that they start to make bad acquisition decisions. And when we look at those kinds of books that were bought late in the cycle, they’re almost never profitable, almost never.’

Having paid more than they should for these gap-filling books, the temptation is to ship out more than is wise in the hope of getting your investment out of them. ‘People tend to ship more copies than they would be prudent to,’ explained Galaxy’s CEO. ‘You know there’s a phrase “stack ’em high and let ’em fly” – that if there isn’t a substantial display of books in a store people won’t see it, and if they see it they’ll think, “Oh, well, they have so many because this is a hot book.” But sometimes that doesn’t happen.’ Of course, this temptation doesn’t just affect gap-filling books – it is a feature of trade publishing across the board, for reasons that we’ll examine in more detail later. But the temptation is particularly strong with the gap-fillers, precisely because the main reason for publishing these books is to fill a budget gap, so everyone in the organization, from editors and publishers through to sales and marketing staff, is focused single-mindedly on trying to maximize the revenue they can generate from them (coupled with the fact that the high returns, if and when they come, will be a problem postponed for another fiscal year).

The CEO of Galaxy often finds himself at odds with his parent corporation when it comes to budgeting and managing the gap. The parent corporation is publicly quoted, and Galaxy’s CEO has come to the view that ‘a trade publishing house is not a good fit for a public company’. He elaborates:

If you’re going to be in the trade business, certainly you should expect growth, but the growth will not be quarter on quarter – you know, what Wall Street is expecting or the City of London is expecting. It will be like this [he traces a wavy line, up and down, with his index finger], and if you try to go like this [he traces a steadily upward plane], you will ultimately affect your profitability, because there is no way to make up for a Da Vinci Code in the next year. It’s like Star Wars: when Star Wars comes out, it does $500 million, and when it doesn’t, it doesn’t. It’s a good analogy, because for that $500 million picture you might have to do 100 movies, or 50 movies, with all the associated expenses. And it’s the same in books. So to make up for a $20 million or $30 million or $50 million book when the average book generates probably under a million dollars, you have to do 50 pieces of art and 50 typesettings and all that shipping and all that paper and people have to sell it 50 times and keep it in stock, and the chances are you’re not going to get there anyhow. So I am usually at odds with our management on this, because they have to view things from a shareholder-value point of view, and my point is that we could be increasing the shareholder value by letting our sales go down, and not trying to make up for the aberrational books. So if the board of directors see a declining line, even though it’d be a wavy declining line, then they should get rid of this management, but if they’re seeing this line going like that [he traces a wavy line from left to right], then they shouldn’t. So [the parent corporation] is sort of coming around now to where revenues are becoming less important to them than margin. I’m saying that I can keep increasing our margin and our profits but I can’t keep pushing the top line too.

Despite the pleas to his corporate bosses, the CEO of Galaxy has to manage a gap every year – in this corporation it’s called a ‘task’. Every year he sits down with the senior manager to whom the various publishers of the imprints report, they look at what they did last year and they assign them a task for the coming year. ‘So everybody gets a task by imprint and they’re always trying to work their numbers. So they either buy or they come up with other ideas from books they own from previous years that can generate incremental sales. They have the same problem on the micro-level that I have, so if they had a big book last year and they don’t have it now, they’ve got to get as close as they can. And then we’ll chart the progress. Every month when the financials come in we’ll sit down and look at how we’re doing against the task.’ But as the CEO of a publishing company owned by a publicly quoted corporation, he faces another constraint – working capital. In financial terms, their performance is assessed not just in terms of top-line revenue and bottom-line profit but also in terms of working capital, and ‘advances are a gigantic portion of my working capital. So the leaner I run on inventory [which in this context means new books purchased], the better from that standpoint. On the other hand, it makes you nervous not to own any books and say, “Where am I going to get this?”’ In other words, controlling the expenditure of working capital means that less money is available to pay large advances for books that will come out in two or three years’ time, and that means that there are fewer big books in the pipeline that can be counted on for next year’s budget. Hence there is more pressure on publishers and editors to buy big books late in the budgeting cycle in order to fill the gap, raising the levels of anxiety among senior and middle managers as they move further into the cycle and increasing the likelihood of desperate enthusiasm setting in.

Public vs private corporations

Publishing companies that are owned by privately held corporations may be insulated to some extent from the financial pressures faced by companies like Galaxy, but they too will be expected to grow year on year and to deliver a respectable bottom line. The main advantage of being owned by a privately held corporation is that, depending on who the owner is, the privately held corporation can afford to take a more lenient attitude towards the vicissitudes of the trade publishing business. ‘Any publishing personality understands that this year’s good and next year’s bad and there are going to be good years and bad years,’ said the former CEO of a large publishing house owned by a privately held corporation. ‘Whereas corporate people don’t understand that, or if they do understand it – and they probably do because they’re not fools – they don’t care. When they’re publicly owned all these businessmen fall back on the excuse “But I am responsible to shareholders.” I think it’s bullshit for the most part; it’s an excuse. But they have that excuse and maybe it’s real for all I know.’

But the publishing houses owned by privately held corporations will still be expected to grow year on year and will be subjected to similar budgetary pressures – they too will have a gap they have to fill every year and will assign specific tasks or financial targets to each of their imprints. The growth and profit targets may be a little more modest and the parent corporation may be less unforgiving if the targets are not met, but the pressure to perform to certain financial goals is just as much a part of daily life in the house owned by a privately held corporation as it is in the house owned by a publicly quoted one. ‘Basically we’re given a target from our parent company and then it’s disseminated through the organization,’ explained the CFO (chief financial officer) of ‘Mosaic’, one of the large publishing companies owned by a privately held corporation. ‘There are certain groups that are stronger than others and based on that they may be given more. Everybody is tasked because if you don’t task groups they’re not going to perform up to the level you require. I’m a firm believer that the only way to get growth is to give them a task and give them something to work towards. If you just basically say you’ve got to grow 2 or 3 or 4 per cent each year, it’s not going to amount to anything. You’ve got to stretch it.’

From the point of view of the publishers and business managers of the imprints in the privately held corporations, the budgetary process is very similar to that in the publicly quoted corporations. A budget is first prepared from the ground up, looking at all the titles that are in the pipeline and estimating sales for the coming year, estimating production costs and marketing spend, and then submitting the draft budget to corporate finance by around September. ‘We throw it all together, come up with where we think we’re going to be on a realistic basis, and then we know exactly what they’re expecting of us and that’s our gap or our bridge, and that’s what we try to fill going forward,’ explained the business manager at one of the imprints in Mosaic. Although they are not formally told what their task is until they have submitted their draft budget, he has a good sense in advance – ‘We kinda have an idea now what they’re going to expect for ’09,’ he said when we spoke in March 2008. ‘We had the ’08 budget, we know it’s not going to go down or it’s not like we really get relief, OK. So we know it’s either going to be the ’08 number or 5 per cent above – in that range.’ In Mosaic, the emphasis is on bottom-line profit rather than top-line revenue growth, so the target they are given is defined primarily in terms of profit rather than sales. ‘So we could fill the gap with inventory savings or advertising savings, or we could fill it by increased sales. How we get to where they want us to be is up to us. They say, “We want this amount of profit, that’s what we expect of you, deliver it.” Where we get it from is up to us.’ So if the profit of this imprint in 2008 was, say, $4.8 million on a turnover of $80 million, then their target for 2009 could be $4.8 million plus 5 per cent, or $5.04 million. And if their draft budget for 2009 showed a provisional profit of, say, $4.6 million, then the task for 2009 would be to find an extra $440,000 profit, either through increased sales or increased savings or some combination. In a bottom-line driven corporation, that’s the gap.

Managing a profit-based gap means that ‘you have to worry about every single line of the P&L, because every one directly affects the bottom line.’ You start by trying to increase sales – ‘We will go to each publisher and say, “Look, you know what? We need an extra X amount of sales out of you, OK?”, and we hope that by the time we get into the next 12 months, they can fill that gap,’ whether through new title acquisitions, special promotions, more focused marketing and so on. But if that doesn’t seem to be working (or is not working well enough), you can cut costs – ‘“You know what? We’re going to stop doing your Times ads for the next three months unless the book hits the bestseller list” or something like that. If we see that the sales number is not going to be achieved, we’ll look at other things. We’ve got promotional items we can live without, tighter printing, less special effects on the cover, anything we can do to affect the bottom line.’ You can even change formats for some titles – release them in trade paperback rather than mass-market paperback, because you’re likely to get fewer returns on trade paperback and the royalty is slightly lower, so that too will help.

One type of book that has worked well for this house as a gap-filling title is adaptations of screenplays for new movies. ‘If we see a movie coming out, we run by the screenplay and get the adaptation. It’s a novelization of the screenplay. Even if it’s not a huge movie, at least the movie’s going to come out and we’ll have a book out there.’ They’ll typically publish the novelization of the screenplay as a mass-market paperback and may be able to ship out 100,000 copies, even for a small movie. This is relatively quick, relatively easy, gap-filling publishing. ‘So there are things we can do that can move the needle.’

Even though Mosaic is owned by a privately held corporation, the pressures are just the same – ‘The pressures are tremendous to hit your target, to make more and more every year with less.’ They maximize the number of titles they can do in a year with the same or fewer staff, putting more pressure on everyone, and everyone is under pressure to do what they can to meet the profit target either by increasing sales or cutting costs or both. If they fail to meet their targets then everyone will suffer in terms of compensation, because bonuses are tied directly to meeting targets. Jobs may even be threatened. ‘I think about it every day and night, to be honest with you. We employ 180 people here and we want to make sure that we employ 180 people tomorrow and next year and the year after. Eventually, if you don’t hit the targets, they’ll have a new business manager – you know, it’s one of those things.’

So whether the parent corporation is publicly quoted or privately held, the budgeting process in the publishing houses owned by the large corporations imposes a financial discipline on the publishing imprints and divisions that obliges them to strive for certain targets through a combination of gap-filling acquisitions and cost-cutting measures. Buying big books late in the cycle, coming up with ideas for new books that can be put together quickly and crashed out, squeezing more revenue out of existing books through extra marketing and promotion and, if all else fails, looking to cut costs wherever you can in order to improve the bottom line even though top-line revenue may not be growing in line with corporate expectations – such is the normal struggle that characterizes life in the large publishing corporations, provides a constant source of anxiety for senior and middle managers and further raises the stakes for new books that are perceived as big in the web of collective belief.

On not minding the gap

While all publishing houses owned by large corporations will find themselves minding the gap in one way or another, this is a practice that is alien to the small and medium-sized independents. Many (though not all) independents will prepare budgets for the coming year and many will look for growth year on year, but the independents are not subject to the kind of external pressure for growth that governs the corporate publishing houses and they don’t generally try to meet their budget targets by exhorting their publishers and editors to acquire gap-filling books that can be published quickly. Indeed, the absence of the gap-filling dynamic is one of the key features that distinguish independents from corporate publishers: it is not a daily fact of life for those who work in the independents in the way that it is for senior and middle management in the publishing corporations. ‘I have never, ever heard that kind of discussion here and I would never expect to,’ said the head of one well-established, medium-sized independent house. ‘We own ourselves. If our sales drop 5 per cent in the upcoming year and our profits drop 20 per cent, I mean my fellow directors and I are going to get really concerned about it. If we’re looking at a three-year trend line or a five-year trend line, we’ll start to do some things, probably about cutting expenses over time. But we are never going to go out to acquire a book that doesn’t belong on our list just because it fills a gap in the upcoming sales budget; it’s just not gonna happen here. Never. I’m proud to say that I’ve never been part of a discussion like that here.’

For this publisher, the fact that they don’t get involved in the kind of gap-filling publishing that is common in the corporations is a source of pride; it is part of what makes his house special, in his view, and marks it off from the world of corporate publishing – ‘This is one of the points that, to me, tells you why [X] is a special place.’ For other independents, not minding the gap is just the way business is done. It’s not that they explicitly reject the idea that acquiring books should be governed by the need to meet a budget target, it’s simply that most of what they do isn’t done with a budget in mind. ‘We don’t have budgets,’ explained the founder-owner of one of the most successful of the medium-sized independents. ‘We’re not unaware of money and we’re not unaware of expense, but it’s not through budgeting. It’s all experiential. We simply go by precedent and knowledge of when we vary from precedent, and we have controls to keep us within the same guidelines.’ Of course, this founder-owner wants to see his company grow every year, not because he needs to meet the expectations of corporate bosses but simply because he wants to be able to meet his financial commitments and reward his staff. ‘How bright do you have to be to know that if you do less well this year than last, that’s a bad thing? Or if you do the same as last year and inflation adds 3 per cent to your cost, that’s a bad thing?’ But he has never set a specific growth target for the company and never instructed his publishers and editors to try to achieve it by going out and acquiring more books. For this particular house, as for many small and medium-sized independents, that’s just not the way that business is done.