Booms and bubbles are considered economic inevitabilities—when the getting is good, people will keep buying and selling until the last dollar to be made is had. Recent times have witnessed the burst of the tech and housing bubble. Most bubbles generally don’t survive longer than a decade due to a continued escalation in the destructive behavior that eventually dooms the industry. But what if a bubble lasted longer? Could the traditional publishing model be seeing the end of a 40-year bubble?
Bubbles occur for several psychological reasons, but the one that pertains most closely to the traditional publishing model is “The Greater Fool Theory.” This theory, although not scientifically proven but empirically observed, relies on the market’s overvaluation of a product leading to an inflation in price. The price continues to rise as long as a seller can find a greater fool than himself to sell it to. When the price finally plummets, the bubble bursts.
Moreso than books being overpriced, the traditional publishing model has been propped up by several illogical modus operandi that could eventually lead to the collapse of this house of cards.
1. Dog eat dog: Over the past 40 years, the publishing industry has gone from small publishers working with authors to instead being dominated by the “Big Six” corporate publishing houses (Random House, Macmillian, Simon & Schuster, Pearson/Penguin, HarperCollins, Hachette). Corporate publishing eventually led to the rise of the literary agent and the retail behemoths Barnes & Noble and Borders. Corporate publishers continued to acquire smaller presses that couldn’t compete with the large advances that corporations could offer. Larger advances led to more complicated deals, which needed to be brokered by an agent who preferred to work with corporate publishers who offered larger advances. With more books in their catalogues and backlists, the small independent bookstore could no long house, nor move, that quantity of inventory, and they were soon largely put out of business by the corporate mega-bookstores. However, in order for corporate publishers to continue to see profit in a very mature industry (and every corporation has to see profit), the Big Six began acquiring and producing fewer titles and attempting to sell more of the books they produce (i.e., publishing high concept book that could be optioned for their film rights, celebrity tell-alls, etc.) So while there is more book-selling space, fewer books are actually sold.