NEBULA EXPRESS
Science-Horror

"Nothing Seems Right/Near The Speed of Light."

Article: (Special to Publishing Industry News.) Copyright @ 2011 by John T. Cullen. All Rights Reserved.

Fundamentals. As the Old Publishing (print) is being replaced by the New Publishing (digital), the Old leaves many lessons for those who wish to truly grasp the New. We need understand the fundamental nature of publishing itself to understand where we hope to go, and what we hope not to find. We'll start with the core valuation of New York City print publishing houses. This is the bottom-line accounting rubric that cuts across all the vapor and hype in which this industry has long wrapped itself. Much of how the Old Publishing has operated can be explained by their corporate valuation standards.

Clarification: Business Spoken Here. Maybe I should explain that I'm not against corporations, or print books, or apple pie and the American Way. I'd like to think PIN offers a voice of reason, human decency, and common sense, while recognizing that publishing is at its heart a business. With an M.S. in Business Administration from Boston University, I have a robust appreciation for business at all levels. My B.A. in English (University of Connecticut), along with a lifetime of serious reading and study, has made me an avid student of literature and art, as well as history, languages, and related subjects. I am as ready as the next person to couch stories and poetry in a hallowed, idealistic glow. I realize, just as well, that publishing is an investment business. Successful, big name authors all understand this. If you are a beginning author, or anyone who wants to take a serious interest in this industry, you need to understand the nuts and bolts of the business. It is a business, not a nebulous priesthood of chanting Druids inspired directly from heaven. You need to hold the gnosis in your hand, and understand its primary ritual symbol is the dollar sign. I have studied the publishing industry for many years, especially since I developed intense personal interest in digital publishing in the mid-1990s. I fully appreciate the need for small, medium, and large companies. I remain a believer in free markets, competition, and free enterprise. Big capitalism is not the same as free enterprise—rather, they are diametric opposites. Unregulated, giant corporations strangle competition, stifle innovation, and foster mediocrity. Laissez-faire capitalism allows a tiny minority to grow fabulously wealthy at the expense of the vast majority, and generally impoverishes the entire culture. This is a critical debate across all aspects of U.S. society, as with the effort to humanize health care in the United States with universal health care (which is a proven, humane agency that works well in every other industrialized nation on earth). In this article, we remain focused on publishing as a business. It's time for the Big Six to go (in the sense of the present cartel), and for the new digital publishing to bring freedom, competition, and quality back into our culture. We'll explore the various ways that will happen in several of these columns. In today's column, we'll examine the fundamental, technical valuation of a print publishing house. (more…)

Publishing Today. Over the past half-century, the many independent houses in New York City have largely been bought out by ever-larger conglomerates. At one time, there were many smaller imprints, independent of each other and, *most importantly*, in *competition* with each other. Today there are just six giant monopolies in a cartel that is now often referred to as the Big Six. They literally own and operate a fossilized industry consisting of the Big Six publishers in Manhattan. They operate through one huge wholesale distributor (Ingram), plus Baker & Taylor and a quickly dwindling tail of smaller distributors. These distributors ship books from the Big Six to two enormous chains (Barnes & Noble, and for now, Borders, which is on the ropes as we speak). The industry is served by perhaps 25 important agents who connect aspiring authors to the Big Six acquisition editors, but more often than not serve as yet another impenetrable gateway that 99% of all authors will never penetrate, regardless of their talent or hard work. There have always been at least 10-20,000 small presses. These (like Ten Speed Press or Four Doors Eight Windows) are usually bought up by the conglomerate when they rise above the pack and become successful, the way the alien spaceships in Tom Cruise's War of the Worlds skulk about, vacuuming people up willy-nilly into their maw. Independent and self-publishing has long been condemned as 'vanity,' as 'heresy,' as something unutterably stupid and terrible, to preserve the illusion that only the Big Six can somehow divinely ordain a tiny number of authors to 'be published' (note the passive voice). All this is changing as the digital industry tears holes in the print industry, which is starting to deflate like the hollow balloon it has always been. This balloon actually has a very narrow, tenuous basis that is quickly starting to deflate as the first 10% of their base is surrendered to the New (digital) Publishing.

Why 10% is 99%. As I have written in another column, the entire edifice of the print conglomerate rests upon one economic fact: the economies of scale derived from large press runs. In Charles Dickens' or James Joyce's day, publishers were printers. The terms were interchangeable. Today, printers are strictly in the business of printing books, brochures, mass mailings, and so forth. That is their business investment, and they must know their business inside out to survive and prosper. Print publishers today are not printers, but investors in a different industry with its own risks, opportunities, markets, and methods. Publishers subcontract to huge offset press specialists, who have the equipment to print 20,000 or 40,000 books in one setup, and therefore optimize economies of scale. Here's the key: the profit margin on large press runs is considerably different over that on a traditional short run (say, 500 or 900 copies). Print publishers use short runs (and, more recently, print on demand or POD) to fill short-term needs, but their primary method is the large offset press run.

Publishing is Corporate Investment. Publishing is not only a business. It is a corporate big business. Publishers invest money on books and related products, as well as movie tie-ins and so on, with one goal only: to maximize the equity of the corporate share holders. The Big Six have their game all locked up. They are a cartel of six monopoly corporations. They have the money to invest in large press runs. Historically, they lose money on half (which can become a tax write-off, especially for oil companies and other super-giant corporations that often hold publishers for tax benefits). They make some money on the other half of their investment. Their usually slim profit margin on that half of their books and authors is probably a wash aginst their losses on the other half. Don't forget, too, that they have sizeable fixed expenditures in terms of salaries, leases (few own buildings), utilities, taxes, and other costs.

Cult of the Bestseller. The primary source of income has long been the front list bestseller (we'll discuss lists at a later date). Estimates vary, but it is reasonable to estimate that 5% or fewer of their authors and titles earn most (at a guess, 95%) of the net profits from revenue that show up on Profit & Loss Statements, Balance Sheets, etc. These, and other accounting vehicles, publicaly display a company's current net worth and general financial condition. Again: the publisher, as a business person, is an investor, not so much a lover of books and culture as may have been true a century or two ago during the age of genteel, profit-neutral publishing—by prestigious Boston houses and, later, the early Manhattan publishers. There have always been mass-market publishers, at the same time, dedicated to purveying sentimental, topical fiction that has all the lasting qualities of soap bubbles. Today, publishing is a big business driven by the bottom line—meaning the vast bulk of the print industry, disregarding 30,000+ small presses, and not to mention individuals publishing a book of their own in the tradition of James Joyce or D. H. Lawrence.

Like the Army. To be clear, in and of itself, there is nothing wrong with treating publishing as a business. Publishing is by its nature a business—not the romanticized, quasi-spiritual and sacerdotal mystery conjured by many a starry-eyed literature student or beginning author. (Beginning authors, above all, must understand that they are investing their time and efforts in a business, and are therefore entrepreneurs.) Any large publisher today will have myriad investors, who front money and want to see a standard, understandable corporate stock-ownership structure. Like shoe companies, garden implement companies, and any other business, you'll find a Board of Directors, a CEO, a President of the Board (not necessarily the same as a CEO), and other standard corporate plug-ins. By analogy, the world's military organizations mostly tend to have identical command structures, from field marshals and generals on down to the lowliest private. In publishing, it's from Mahogany Row down to the lowliest editorial assistant. Investors want their risk to be distributed in the most predictable ways possible, while maximizing profits. That's just a bare flavor of a multi-billion dollar industry. Now we'll take a glance at the Big Six, who drive this entire industry.

The Big Six New York City Media Cartel. Most readers and publishing professionals today, unless they are within reach of Social Security retirement age, will probably not recall a time when there were far more than six publishing giants in New York City. Over the past half century, the dozens of independent imprints around Manhattan have been bought by conglomerates, often companies so vast that they have nothing to do with books (like oil companies, the world's largest corporations). Today, each of the long-ago imprints has either vanished, or is owned by one of six monolithic giants (the Big Six) in New York City. This conglomeration is not visible to most people, since the Big Six continue operating most of the old imprints, creating an illusion of diversity and competition. Monopolies kill competition, destroy free markets, stifle innovation, and promote sameness and mediocrity. That is very much true of today's Big Six. That is not really the fault of the many fine professionals (editors, marketers, etc.) working in the only game in town. These professionals would just as much benefit from free enterprise, free markets, and competition that the New (digital) Publishing seems on the verge of reintroducing.

The Big Six include the following giant corporations (courtesy sources including Writer's Market and FictionMatters). Most of these six conglomerates in this cartel are owned by even larger, non-publishing corporations. Four or five of these six are not U.S.-owned, so that the U.S. publishing industry is largely controlled by foreign interests; make of that what you will. The list of subsidiary imprints for each of these monopolies is eye-poppingly long, sometimes in the dozens of supposed 'houses' that are usually just separate cost centers (if that) housed in the same building. These include Random House, Doubleday, Scribner's, Tor, MacMillan, St. Martin's Press, Farrar Straus & Giroux, and many more—over half of them today foreign-owned. The following are ordered alphabetically. They are numbered simply for tally purposes, not in any order of importance.

List of the Big Six.

1. Hachette Book Group (French media conglom Lagardére Group)—formerly Warner Books (subsidiary of Time Warner);
2. HarperCollins (Australian-U.S., Rupert Murdoch’s News Corp). Murdoch is a British Commonwealth citizen who recently acquired U.S. citizenship simply to increase his vast media empire by buying up a large portion of U.S. satellite channels (requires U.S. citizenship). Like many of the formerly independent houses gobbled up by consolidations, Harper & Row and Collins were both founded in the early 1800s, and used to represent a venerable publishing tradition;
3. MacMillan Publishers Ltd. (German: Holtzbrinck Publishing Group); founded in 1843 as a U.S. publisher;
4. Penguin Group (British) Ironically, though founded in U.K., got its start selling cheap paperbacks through U.S.-owned British Woolworths (U.S., 1897-1997, extinct) and British department stores. Bought up Signet, New American Library, etc;
5. Random House (German, Bertelsmann conglomerate). Includes Knopf, Crown, Doubleday, etc;
6. Simon & Schuster (U.S., CBS Corp.). Includes Pocket Books, Scribner, and others.

Valuation: Putting It All Together. Do you suppose that, if someone were to make an offer to buy Anaconda Publishing in New York City (hypothetical mega-corporation), they would value Anaconda because it has a nice, 50th floor of the East River, or because they publish titles shrouded in academic incense and Gregorian chant like, say War and Peace? No, the fact is that publishers today generally lease their office space, they outsource to printers and dust jacket blurb writers, and do not own capital equipment like trucks and train tracks. So what do publishers own that is of any monetary value? Certainly a profitable publisher may have cash on hand. They may even have subsidiary investments in stocks and financial derivatives. To get a vanilla sense of how to value Anaconda Corporation, we strip away any wild cards, like property leased long term (in which preferential terms may be an asset to the corporation). When we are done factoring out peripheral factors, we are left with two things. These are the only things a typical publisher owns: Good Will and Rights.

Good Will. A relatively small part of a publisher's valuation may be what is called, in accounting, Goodwill or Good Will. This usually comes at the end of negotiations, when buyers and sellers wrap up their deal. The company's name may have some intrinsic value. Typically, sellers could demonstrate this, and buyers could perceive the value, in the existence of a registered tradename (Anaconda Corporation, Inc.) and a registered trademark (picture of an Anaconda with a scarlet letter A in its coils, and a face on it resembling the CEO's) or even a registered tradesign (picture of an open book above Anaconda's office doors, with an anaconda coiled around the book, this being a representation of the publishing industry more generally and Anaconda's foothold in it). Whereas Purple Potato Press in an Indiana garage may have published one book written in crayon on brown wrapping paper, the PPP name very likely has no intrinsic value. A marketing guru with a sense of humor may be able to make something of it, but let's not tell the accountants that. So, quite possibly, once the deal is done, the accountants may throw in 10% for Goodwill. That is potentially the largest of the non-rights chunks of valuation assigned in a sale.

Rights are Everything. Now we begin to understand the almost psychopathic obsession of Big Six print publishers in acquiring all of your rights, whether they'll ever use them or not. We've seen that most of their profits come from a tiny group of quasi-billionaire front list, best selling authors—perhaps two dozen names, like Danielle Steel, Dean Koontz, and James Patterson. These authors become industries in themselves, in that they lend their names to less well known authors in return for a share of the profits. Remarkably, some authors, like Robert Ludlum, are long dead but continue to help younger authors (by ectoplasm, one supposes) to craft Ludlumesque or Dead Authoresque fiction that is more of the same.

Simple Arithmetic. If a Big Six publisher has 500 authors in the hopper at any time, and only five or ten make any significant profit, then the rest are going to be midlist authors. Midlist authors receive no promotion, and vanish after a book or two, mostly never to return to print. This illustrates the slash and burn approach of monopoly publishers. First, they destroy tens of thousands of publishing careers of talented authors by never allowing them to reach print (there is no name for this; rejects? no-list?). As I always must point out, most of the great names on your high school or college Literature survey course were authors who were hated, rejected, and ridiculed by the pompous asses in charge of the industry in their time; but they had courage, talent, vision, and perseverance. Yes, for every James Joyce there may be 1,000 people with non-seismic things to say. The successful names we know as 'Literature' (which is what we call books that were resounding commercial successes in their day, after being self-published because the establishment could not recognize their worth) nurtured a few resources (money, connections) to self-publish; and presto, we have William Shakespeare, Daniel Defoe, Charles Dickens, James Joyce, D. H. Lawrence, and myriad other now famous authors. Back to the modern day: Of those whom the gate keepers allow into the tiny pipeline to reach print, most will lose money (because readers don't like them) or make small sums of money, often not earning back their tiny advances against royalties. Most will sort themselves out as midlist and will not have real or long careers. However, dot dot dot…keep your eye on the ball, and watch Magic Snake-O pretidigitate right before your eyes. Look closely or you'll miss the grand trick!

Predatory Print Contracts. Every author who ever signs a 'traditional contract' will find words like the following, in which the publisher buys "...all rights, in all formats now known or yet to be devised, for all perpetuity..." Most authors who make it into print are doomed for the midlist and imminent disappearance. Nevertheless, Anaconda likes to keep their little larder of 'owned rights' stocked with all sorts of game. It's a bit like that otherwordly trophy case that Danny Glover's character finally stumbles onto in the climactic scene of Predator II in the alien spaceship. We suddenly realize that the evil aliens have been hunting innocent humans for centuries, and keeping trophies of every kill in a grisly underground museum. Anaconda's rights closet is a lot like that. It has been the experience of many a midlist author, whose work went out of print all too quickly, to see that the publisher will never again publish the work, now owns the entire bundle of rights, and will never release them back. Your book is no longer yours, will never be yours again, and is dead to the world forever. But the rights remain in Anaconda's locker in case the company is ever sold, and needs to be valued by accountants and auditors. That's what it's all about. You've been thrown under the bus again.

Know Your Rights, and Register Copyright! You have spent a lifetime driving, striving, and educating yourself at the expense of many things, including ridicule from your family and neighbors for daring to try something they cannot understand inside the #5 paper bag covering their thick skulls. You spent five years writing your first mystery novel. The publisher, Anaconda, proposes to print 25,000 copies (racksize or mass market paperback), and send them to booksellers around the country. Now remember: when you create any book, fixing it in tangible form—which could be anything from scribbling it on a napkin to typing it on your Underwood—you automatically, under U.S. law, acquire a 100% bundle of rights. You do not obtain any rights by registering your ownership with the Copyright Office of the U.S. Library of Congress. When you register your ownership, you obtain some additional guarantees under the law. You do not receive any more ownership by registering, since you own everything. You own the entire copyright at the moment of fixing the work at your desk in your house, or on your iPhone in the local coffee shop. Do yourself the vital favor of reading the material at the official website of the Copyright Office of the U.S. Library of Congress, which spells it all out in glorious detail.

To Be Clear, Your Rights. Copyright, to be clear, is not one right, but a large bundle of rights including everything imaginable that can be sold in the markets, from First Serial Rights, racksize paperback rights, trade or quality paperback rights, hardcover rights, reprint rights, film rights, play rights, T-shirt rights, skywriting rights, and many more). By the way, it makes little difference what it says on the copyright informatin in the book. The most important element is what it says in the contract. And publishers, who almost never intend to publish more than one or two formats (e.g., hardcover, racksize) will invariably pay you a pittance for one or two rights, but their lawyers will draft a standard contract in which you forfeit all rights forever in all formats already known or yet to be devised. The latter language crept in when the visionaries (not) of publishing missed the boat on digital formats (not real books; will never be practical; etc.). There were many legal arguments about whether the predators at Anaconda can retroactively claim digital rights, even if they are not in the contract (which never happens anymore today, you can be sure).

All Sizzle, No Steak. There are at least two crushing blows being delivered to the Big Six and Anaconda Corporation. First of all, as digital book sales cut into now 10%, soon 50%, and by 2020 an estimated 90% (I say 100%) of print sales, their critical economy of scale advantage vanishes. It vanishes not at 50% or 90%, but starts vanishing at 10%. That's because it is a relatively thin advantage. Already, peripheral but still major publishers (e.g. Dorchester) are bailing out of the print business, and one of two retail giants (Borders) is on the ropes. Secondly, publishers of digital books no longer tend to acquire "all rights, in all formats now known or yet to be devised, for all perpetuity," but instead tend to acquire shorter term rights, sometimes nonexclusive, and certainly not "all rights" but simply what they need to acquire to fulfill the specific publishing opportunity they have short-term leased. What this all means is that the Anaconda-style publisher of recent (Big Six) loses their fundamental claim to have any intrinsic value. If they do not own a grisly meatlocker with thousands of authors' lives needlessly imprisoned for all time, they are as sounding brass and tinkling cymbals; (allow me to wax poetic), they are all sound and fury but no substance; they are as trilling clarinets and sizzle but no steak, signifying nothing. And if they are nothing, their value is zero, and their tradename is worthless.

Summing Up: Digital, the Future. After observing the progress of digital publishing, and more recently the pain of the print establishment, my estimation is that the exclusive, predatory contracts of print publishers will be gone forever. It is possible that niches may evolve, in which certain publishers will provide editorial and other substantive value, in return for which they may claim partial exclusivity. But the extreme, ravaging degree of Big Six contracts predation will never again be so absolute (at best for them). "They" will no longer be "they," although money swings a lot of clout. The successors of the Big Six will include some of their imprints, though others will not have the vision or honesty or courage to meet the future head on, and will thus vanish like dinosaurs. The successors have one possible refuge, in movie tie-ins, though the film industry is at least as predatory as the publishing world, probably far more so, and the dinosaurs who crawl to the film industry, and the anacondas who slither hence while licking their wounds, will find only T-Rex film moguls waiting to snap their necks and gorge on their innards. Meanwhile, the James Joyces and D. H. Lawrences of the New (digital) publishing will benefit greatly from the new technologies, the freedoms posed by the demise of gatekeepers, and the openness of readers who learn there is more to the world than Anacona same-same. Readers will continue to look for quality in package and presentation. Autonomously publishing writers will learn how to put a good package together, free of typos and with a nice cover. Where the twain shall meet, it is virtually impossible that any print industry fossil will find a reason or a means to exist.

Sator Enigma: Ancient Roman Mystery Solved

The so-called Sator Square (also Sator Rebus, Puzzle) refers to a mysterious ancient text found on walls throughout ruins of the Roman Empire. Archeologists have found exemplars in such diverse ancient Roman locations as a government hall (aula) in Cirencester, Britannia; twice in Pompeii, pre-dating the city's volcanic destruction by Mt. Vesuvius in 79 CE; and in the distant frontier fortress of Dura Europos on Rome's Mesopotamian border with Parthia. Something about this strange, cryptic writing must have been so important that the Romans would post it in their government halls, public squares, and top military headquarters.

It is one of the most perfect palindromes ever created. A simple palindrome is a text that reads the same, backwards or forwards; e.g., "Madam I'm Adam" and ".madA m'I madaM". The Sator Square is a perfect four-way palindrome that reads the same left-right, right-left, up-down, and down-up. Nobody had a clue how to translate it, despite thousands of hours of research, hundreds of learned books and articles, and at least one Ph.D. thesis in Classics at Yale University.

John T. Cullen solved the puzzle in the summer of 2007, almost coincidentally, while continuing eight years of scholarly research for his nonfiction/Ancient History virtual tour guide A Walk in Ancient Rome, Revised 2nd Edition (Clocktower Books, Summer 2011). He had been aware of this baffling cryptogram from long ago, which has since become an object of superstitious reverence in certain Christian and Neo-Pagan settings. Suddenly, while taking a break from his Rome research, he looked at the Sator Square in a new way—and was able, within a few weeks, to both translate it and explain it plausibly. A production company for the History Channel has flown him to Yale University, from his home in San Diego, for an interview next to the exemplar from Dura Europos in modern Syria. The episode, in which he is capstone speaker, is to be aired across the USA and Canada by the History Channel.

Ironically, at the annual convention of International Thriller Writers, of which he is an Active Member, in New York City in July 2009, he was the only author present who had actually deciphered and explained a cryptic, ancient epigram of world importance—and lived to tell about it.