Blockbusters: Publishers still swinging for the fences …

Despite a weak economy, publishing executives are still making what many see as outrageous gambles on new manuscripts.

With double-or-nothing daring, most large media firms make outsized investments to acquire and market a small number of titles with strong hit potential, and bank on their sales to make up for middling performance in the rest of their catalogs.

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Here’s what Prof. Anita Elberse – author of the “Dewey the Cat” case – had to say in the WSJ ….

 “Blockbuster or Bust”

Given the constantly shifting tastes of consumers, it is extremely difficult to forecast demand for a new title.

The one useful indicator is its resemblance to an existing bestseller.

This similarity is an indicator that’s evident to any editor or publisher who sees the proposal … triggering competitive bidding situations.

When a publisher spends an inordinate amount on an acquisition, it will do everything in its power to make that project a market success.

Most importantly, this means supporting the book with higher-than-average marketing, advertising and distribution support. 

With such high stakes and money tied up in a few big projects in the pipeline, the need to score big becomes more pressing, and the process repeats itself.

The result is a spiral of ever-increasing bets on the most promising concepts, creating a “blockbuster trap.”

But what would happen if a publisher decided to stop making large bids and systematically walked away from the most sought-after — and therefore expensive — new properties?

First, agents would stop sending such a publisher their most promising book proposals, the most talented editors and other creative talent would leave to work for a publisher that would let them pursue the projects they thought had the highest chances of success, and firing up the publisher’s sales reps would be a major challenge.

In most media markets, support from the biggest retailers is decisive.

A significant share of books is bought on impulse, so significant shelf space and room on display tables (“pile ‘em high and watch ‘em fly” tactics) are particularly important.

Book retailers like Barnes & Noble want to see evidence that a book is worthy of their scarce resources.

They like nothing better than to know that a book publisher … is planning an extensive marketing campaign.

Consumers prefer blockbusters.

Because they are inherently social, people find value in reading the same books and watching the same movies that others do.

This is true even in today’s markets where, thanks to the Internet, buyers have easy access to millions and millions of titles.

Compounding this tendency is the fact that media products are what economists call “experience goods”: that is, shoppers have trouble evaluating them before having consumed or experienced them.

Unable to judge a book by its cover, readers look for cues as to its suitability for them, and find it very useful to hear that “Dewey” is “a ‘Marley & Me’ for cat lovers.”

In much the same way that potential publishers do, readers value resemblances to past favorites.

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