Jon Yaged: How Book Publishing Works | How I Write

Summary

Podcast Summary:

How I Write with David Perell
Episode: Jon Yaged: How to Get Your Book Published
Date: March 18, 2026
Guest: Jon Yaged, CEO of Macmillan

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Episode Overview

In this episode, David Perell hosts Jon Yaged, CEO of Macmillan, one of the “Big Five” book publishers. They pull back the curtain on the publishing industry, diving deeply into the business of bringing books to market, consolidation, risk, advances, the changing economics, and the creative DNA that drives publishing decisions at the top level. Jon offers rare, candid insight into how publishing houses make decisions, what it takes for writers to break in, the impact of technology, and where he sees the industry moving.

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Key Discussion Points & Insights

1. The Impact of Industry Consolidation

• Why consolidation happens: The goal is to gain scale and profitability in a margin-constrained business. However, “one plus one doesn’t equal two anymore. One plus one equals something less than two.” (Jon, [02:29])
• Consolidation shifts power, making retailers like Amazon more influential and pressuring publishers on price and margin.
  • “Amazon got pretty big … It’s the old story about leverage.” (Jon, [03:47])

2. Advances, Book Selection, and Industry Data

• Deciding advances: Publishers compare new projects to ‘comp’ titles and use Bookscan data for physical sales projections (which covers about 85% of industry sales but not ebooks/audio).
  • “The first thing we say is this book we think is going to behave like that book.” (Jon, [04:50])
• Selection rate: Less than 1 in 20 submissions get published, highlighting extreme selectivity ([08:26]).

3. The Economics of Publishing

• Financial breakdown:
  • Retailers (Amazon/Barnes & Noble) take over 50% of the cover price for each book ([31:31]).
  • Authors earn a royalty on the cover price (10-15% for hardcover), plus any advance ([31:44]).
  • Other significant costs: printing, freight, marketing, and overhead.
• International and translation rights: Authors can receive up to 75% of the licensing fee for foreign translation sales ([35:43]).
• Backlist value: Back catalog (books >1 year old) often accounts for half of Macmillan’s business and industry profits ([38:03]).

4. Creating and Sustaining Creativity

• Fostering creativity: Jon emphasizes building a company culture where editors, designers, and marketers can thrive—a lesson he brings from creative spaces like Pixar and his musical family background ([20:46], [23:08]).
  • “Perfection wasn’t getting every note right, perfection was getting the vibe right.” (Jon, [23:29])

5. The Human Element vs. Data

• Limits of data-driven publishing: True hits are unpredictable outliers; creativity and gut instinct are irreplaceable ([16:46], [17:13]).
  • “Creativity isn’t an algorithm. It’s just not.” (Jon, [17:19])
• Magic editors: Some editors have an “innate ability” to spot what others miss, and Macmillan supports them to take calculated risks ([18:11]).

6. Author-Publisher Partnership & Pushback

• Author participation: Authors now need to promote and build their own communities in addition to writing excellent books ([11:18]).
• Pushback advice: Jon stresses the importance of open dialogue and respectful challenge between authors and publishers—honest editing conversations lead to the best books ([29:47]).

7. Trends and Formulas

• Formula creep: Publishers chase successful trends—lookalike covers and ‘template’ non-fiction are market responses, but risk-taking yields tomorrow’s trends ([28:12]).
• "Everything looks the same except for the ones that don’t. And those are the ones...taking the risk." (Jon, [28:12])

8. Technology, A.I., and Data

• Where A.I. fits: Jon is optimistic about AI as a tool for metadata optimization, demand forecasting, and improving workflow—freeing humans for creative work ([53:07]).
  • “It’s a better chance that you lose your job to someone who understands AI than you lose it to AI.” (Jon, [53:38])
• Copyright & AI: Pure-AI authorship presents severe legal and investment risks; current law does not protect works generated predominantly by AI ([56:04]).
  • “Our copyright law does not protect things created by AI.” (Jon, [56:04])

9. Children’s Publishing

• Unique challenges: Kids’ books have high production costs but lower margins. Picture books typically share royalties 50/50 between author and illustrator ([41:44], [41:48]).
• Durability: Children’s books often succeed longer (more resilient backlist), supported by intergenerational sharing ([42:45], [43:48]).
• Print vs. digital for kids: Physical books remain dominant in children's publishing despite digital trends ([43:48]).

10. The Importance of Word-of-Mouth

• Best-selling books: The most effective long-term sales driver is “word of mouth”—transformed now into influencer, blogger, and TikTok promotion ([11:29], [12:30]).

11. Marketing Strategy

• Finding the connectors: Focus on targeting connectors, “the evangelists within that community,” to empower word-of-mouth cascade ([65:38]).
  • “You identify the community and then … empower them to spread the gospel.” (Jon, [66:03])
• Iterative campaigns: Test, measure, and reallocate quickly when marketing strategies don’t perform ([67:12]).

12. Industry Worries & the Future

• Children’s literacy: Declining reading levels among kids is existential for society and publishing—a trend exacerbated by digital distraction ([76:39]).
  • “If kids don’t read today, the chance of them growing up into adult readers, it’s less.” (Jon, [76:39])
• Profit drivers: Backlist margins, talent for picking winners, and efficient risk hedging (via catalog acquisition) keep publishing houses afloat ([79:20]).

13. Macmillan’s Unique Approach

• Diverse personalities: Macmillan’s eight divisions have unique personalities—agents often submit the same book to multiple imprints, each with a different vision and valuation ([81:35]).
• Company culture: “I want people to have joy in their day ... If you have joy in your day, it makes the mundane less mundane. It makes the hard days less hard and makes the good days that much better.” (Jon, [84:49])

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Memorable Moments & Quotes

“One plus one doesn’t equal two anymore. One plus one equals something less than two.”
— Jon Yaged on consolidation ([02:29])

“If you saw marketing … which gets you to buy the book, or your best friend told you to read the book—which is going to be the thing? … it’s your friend.”
— Jon Yaged on word-of-mouth ([11:29])

“Creativity isn’t an algorithm. It’s just not.”
— Jon Yaged ([17:19])

“If you get the right editor who just has that feel, you gotta go with it.”
— Jon Yaged ([18:10])

“Perfection wasn’t getting every note right, perfection was getting the vibe right.”
— Jon Yaged ([23:29])

“You identify that community and then you identify the connectors, the evangelists within that community, and then you empower them to spread the gospel.”
— Jon Yaged ([66:03])

“There is no more creator friendly business than the publishing industry.”
— Jon Yaged ([33:43])

“It’s a better chance that you lose your job to someone who understands AI than you lose it to AI, because it’s just another tool.”
— Jon Yaged ([53:38])

“Our copyright law does not protect things created by AI.”
— Jon Yaged ([56:04])

“If we could approximate some of that kind of love that my grandfather had for music into our day to day, we’re going to win.”
— Jon Yaged ([84:49])

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Notable Timestamps

• Industry consolidation & leverage: [02:29]–[03:58]
• Advances & comp titles: [04:44]–[05:39]
• Selection rate and volume: [08:26]–[09:25]
• Author-publisher relationships: [29:33]–[31:11]
• Deep dive: financial breakdown: [31:31]–[35:43]
• Creativity vs. data: [16:46]–[18:11]
• Children’s book economics: [41:00]–[41:53]
• Physical vs. ebook for kids: [42:45]–[44:22]
• AI, copyright & legal: [53:07]–[58:47]
• Finding the next big thing/genre: [59:19]–[60:40]
• Backlist, catalog & M&A: [38:03]–[39:57], [79:20]–[80:39]
• Marketing to connectors: [65:38]–[66:33]
• Macmillan’s internal process/divisions: [81:35]–[84:49]

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For Aspiring Authors – Key Takeaways

• You need an agent: Direct submissions rarely succeed ([10:05], [81:38]).
• Be ready to help market your book: Publicity, platform, and authentic engagement with readers matter.
• Push back respectfully: Creative and editorial debates improve the final work ([29:47]).
• Understand the economics: Publishing is a low-margin, high-risk business that invests deeply in a few winners and sustained backlist sales.
• Embrace creativity and resilience: The most successful works—and careers—often don’t look like the majority.

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Closing Note

This episode demystifies the book-publishing gauntlet from the inside—showing the hard choices, subtle balances, and emotional stakes behind every book you see on a shelf. For writers and readers alike, Jon Yaged gives both a reality check and a hopeful view on the industry’s evolving soul.

Transcript

[A]

You ever wonder how the book publishing industry works? Like printing advances? How does the CEO of a top five publishing house even think? Well, that's what this episode's all about. And my guest is John Yaged. He runs macmillan, which is one of the top five publishing houses. And I said, look, talk to me like I'm a young writer. I've never published a book before. I'm a little bit intimidated by this industry, but I want you to be rigorous and sophisticated with me. Give it to me straight. And so that's what we did. We just talked about all parts of the book industry. And if you're interested in improving your writing, that's why you're checking out how I write. Well, check out another episode. But if you're like, I want to be a super successful writer and I want to understand how this industry works, well, then you're going to like this episode. You wouldn't believe it, but how I write costs a fortune to run, and it's thanks to Mercury, but I can even do it. They're the sponsor of this episode and a banking platform that I've been using for the past four years to run my own business. When I started How I Write, I expected finances to be an absolute nightmare. I got team members in four different countries. I had things to think about, like currency exchange and taxes and expenses, and I was just dreading it. But honestly, banking has maybe been the easiest part. I can't remember running into a single problem, and it's because I've been using Mercury. I switched over from other, more traditional banks because Mercury is so, so well designed. It's easy to get started, it's easy to use, while also feeling totally legit and secure. And Mercury gives me all the tools to run a global company like virtual cards, unlimited users, and the ability to customize each user's access level to exactly what they should see. And you know what? If anything goes wrong, if I have any sort of challenge, I can always talk to their support team, which is super responsive and actually helpful, which is pretty rare these days. And. And all that is why I can't imagine banking any other way. Mercury is a fintech company, not an fdic. Insured bank. Banking services provided by Choice Financial Group and Column and a members fdic. All right, back to the episode. Well, why don't we start here? There's been so much consolidation in the publishing industry. I don't know, going back 20 years. I mean, even I was looking at this chart of Penguin Random House and how it became Penguin Random House. And I swear it's like 45 different companies that consolidated into one. So how does consolidation impact the book publishing industry? And who makes the money and then the kinds of content, the kinds of books that are published.

[B]

I think the ultimate goal on consolidation is to get scale so you can deliver the same kind of results with more profitability. The trade off is a lot of times is you get combinations of businesses that, that maybe overlap, that maybe some get more attention than others. And I think more often than not, you sort of lose a little bit along the way because one plus one doesn't equal two anymore. One plus one equals something less than two. That's, in my experience, what happens in consolidation in terms of the output, in terms of the books that are entering the world, in terms of the financials. I think it depends on how you execute it. But the ultimate goal is how do you get scale? Because we're a relatively small margin business and there's more and more pressures on the cost side of our business over the last several decades. So consolidation is an attempt to grab back some of that value chain for the publishers.

[A]

And those pressures are coming from where?

[B]

A lot of those pressures are coming from. Retailers getting more discount, big retailers asking for more discount, retailers asking for more assistance with promotions, authors commanding more advances and then freight salaries, printing costs going up.

[A]

And why are those other people getting power relative to the book publishers?

[B]

Amazon got pretty big. You know, Barnes and Noble is the last, you know, sort of traditional retailer left standing outside of the independents. And the mass accounts still control their shelf space.

[A]

Yeah.

[B]

So it's leverage. Right. It's the old story about leverage.

[A]

Right. And it seems to me like there has been a bigger push for celebrity books. Is that true?

[B]

You know, I get this question a lot, and I haven't sat down to do the math and say, are we doing more celebrity books than we used to? I'll say it this way, they're definitely more visible. And I think they're working at a. When they work, they're working at a higher level. But there's also a lot more risk because of that, because the cost to get them is a lot more. So I can't tell you off the top of my head, yeah, we're publishing as an industry, more celebrity books than we used to. It feels like probably a little bit. But I'll tell you, when they work, they're incredibly successful, but there's a lot more risk with them than they used to be.

[A]

And that's because the advance. The advances are.

[B]

Yeah, the advances Are.

[A]

And how do you think about when you're in a boardroom? Like how much of an advance to

[B]

give for a celebrity book or any book, Any book? Well, I mean, the first thing you do is you try to compare it to something else that you've published or something else that's been published in the world. You come up with comps. It's the age old thing for editors and sales folks. What's the comp for this title? And even when the sales team sells them in, they're looking at comps because that's what they tell the buyers at the accounts. Yeah, this book is like this. So the first thing we say is this book we think is going to behave like that book. It might be a book we published, it might be a book someone else published. And then we reverse and, you know, we look at the math. You know, we have Bookscan, which gives us the data for physical sales. It's a, you know, a database of pos, a point of sale information. We can look at the sales and sort of track where we could be. Agents also give you sales numbers of books because they want you to jack up the advance. And then we just do the math and say, okay, if we think this book is going to perform like that book, how much can we pay for it?

[A]

And with that Bookscan, does that account for Amazon sales?

[B]

Yeah, absolutely, that does. A Bookscan accounts for, I want to say something like 85% of the industries, some of the independence and a couple things here and there. Again, this is physical. It doesn't count ebooks, it doesn't count audio.

[A]

And now in terms of where the margins are, my understanding is that the hardback has much higher margins than the paperbacks. Is that right?

[B]

Again, it depends. I mean the price point, the royalties are different. We pay higher royalty on a hardback than we do on a paperback. It's part of its accounting. How do you account your unearned advance? Because you're paying in advance. If you don't sell enough copies to earn back that advance, we eat it. The publisher eats that cost. Some people write it off against the hardcover, other people spread it out across the life of the book. So that that becomes an accounting treatment in and of itself. I would say the paperback on a long tail will be more profitable because generally you're not spending as much money on the marketing side because the marketing money has been spent and the book's going sort of more by word of mouth. That's sort of a rough estimate on the profitability of a book.

[A]

And then when a book goes from hardback to paperback, is that always after like nine months or a year, like that's priced in, or is there something that happens in the volume, the behavior of the book sales that then accounts for that change?

[B]

I think more often than not what we try to do is say, okay, roughly one year out for, for, for general commercial fiction, one year out, you would often switch from hardcover to paperback. Then there's going to be exception, really big best selling books. You're going to say no, that author will put them on a two year cycle, hardcover, year one paperback, after two years of hardcover. And then you sort of monitor it. Now you have books that are surprises, books that are selling incredibly well in hardcover and their track is continuing to do well. You'll keep pushing out the paperback because there's no reason to. If it's still selling at this higher price point, why change it? And also the ebook pricing is dictated on the physical price. Hmm, explain. Well, you know, you're selling a book for 29, 30 bucks, your ebook price is gonna be in that 1299, 14.99 range. Once you go to paperback, you're gonna drop the ebook price too.

[A]

And are the margins the same for authors and for you guys on the ebooks as the paperbacks?

[B]

No, there's less. There's no production costs on the limited production costs on the ebook. So the margins on ebooks are slightly better.

[A]

Can we just zoom out real quick? Will you give me a sense of how many books are submitted to you guys every year? How many books do you publish? I ask is because I'm an author. I've worked so hard on my book, I've been working night and day and now I'm showing up and you are going to reject me. Come on, it's me. And I think that there's. From your. I want to get it from your perspective. Look, maybe you wrote a great book, but this is how many books we're dealing with. And I want you to see it from our side.

[B]

Yeah, I've never done a count to say how many books are submitted versus how many we publish. If I had to guess, I would say conservatively we publish less than 1 in 10. It's probably more like 1 in 20

[A]

or 30 that come to you.

[B]

Right. Okay, now that doesn't mean someone else doesn't publish those books. Right. So, and that's another beauty of that creative process. Books that I think or my, the editorial team don't think are going to work for us. Someone else thinks that they would a book that I might want to pay $100,000 for, someone pays $500,000 for. So those differences are out there. So we're publishing as an industry probably somewhere in the area of 20 plus thousand books a year round numbers. Probably maybe 25. It would be my take. And that's a lot of books. That's a lot of books. But there's still that many more people that want to be out there publishing.

[A]

And how many books do you guys do?

[B]

We do about 1200.

[A]

You do about 1200. So you do about 1 in 20 of the books that are published.

[B]

Yeah, we're about a 5% market share business.

[A]

And then Penguin Random House is the biggest. And why is that?

[B]

Well, I mean, they're just, they've acquired different companies, they've done consolidation over the years. So they've, they've bought up a bunch of companies over the years. So that's, that's what they've done. I mean, if you look at their market share over the last, I think decade has been pretty consistent. But, you know, over the years they've, they've added and added to their, their business.

[A]

And if I'm an author and I'm like, okay, I want to get in touch with McMillan, what is, like, what is the best way to do that? I just always assume that emailing the people at the front door, like, on the official thing, I just like, have a default assumption that that doesn't work.

[B]

I don't know.

[A]

What do you do?

[B]

It doesn't work. I mean, this is one of the challenges with our business and why people are like, so mystified by it. You know, we generally don't accept submissions unless it's coming from an agent or someone we know already. And the process of getting an agent is, is also incredibly challenging for authors. So generally speaking, we have agents we work with, they submit books to us, or we have authors that we've worked with and people that we know and say an editor might come up with an idea and say, oh, this would be a great idea for this author. And they go to that age and say, look, this is the idea I came up with, with so and so want to write it. Those are the two ways that we get 99% of our books.

[A]

What do you think about with nonfiction? You know, I was out with some authors last night, and there was an author, he was saying, I'm working on my email list, I'm working on my Instagram. I really want to start building that up. As I ramp up my Novel. And I just sort of paused him and I said, I'm not saying that this is what you should do, but what if you just burned the boats and said, I'm going to write the best damn book I can? And he said, you know what, I think about that all the time, but also I try to look at the realities of this business. I feel like having my own distribution channels is super valuable. What would you say to him?

[B]

I'd say you got to do both. Write the best book you could possibly do, but also build up your own channels. There's really the best way to sell a book has not changed in hundreds

[A]

of years, which is write a damn good book.

[B]

Well, it's that and word of mouth, right? The best thing that you could do is, like, if you saw marketing, if you saw something whenever you read that gives you. Tells you something, oh, I should buy this book. You see it on the side of a bus. If your best friend, someone you trusted, told you to read the book, which is going to be the thing that's going to get you to buy the book sooner, it's your friend. And so word of mouth just looks different today. It used to be the trusted reviewer. It used to be a scholarly review. Then it was, you know, for a while we had bloggers, you know, we had independent booksellers and librarians in particular that were really influential bloggers. This is going back, call it 15 years ago. And they were really driving sales. And then it became Instagram, and now it's TikTok. But it's still what it is. It's word of mouth, right? It's a trusted source giving you a recommendation.

[A]

How do you have crazy ways of tracking things? Like at macmillan, like, when you think of, I don't know, the. The John dashboard, like, what are some really cool things that you have? And what do you wish that you had that you can't have? Because maybe there's technology limitations, legal limitations, something like that.

[B]

Well, what I really wish I had was something that monitored how a person was reading the book, when they put it down, when they decided to stay up late and not stop reading, when they did that bender to finish the whole book in one, right? And some people try to approximate that. And there's like, oh, I have these group of readers and they're going to tell me, you know, if. If someone tells me they've read 30% of the book within the first day that they get it, I know I hit on my hands. And people actually send it out to folks to help. Do that in manuscript stage. So for me, if I could really track readers behavior, that would be great because you know, self reported information is always, you know, it's less reliable than actual behavior. So if I, if I knew what people were actually doing, if I can interact with people more directly than we can, because most of our interactions are indirect, if we market to someone, it's somewhat indirect action because I'm putting it out in the world and then a bookseller makes the sale. So if I could track how my ad actually generated a sale, that would be incredibly valuable because then I would know how to change my ads. I know how to change maybe the demographic that I'm reaching. And we approximate it, we have things that we could track, pieces of it. We just can't track it the same way. An online retailer, if you're going to buy toothpaste, you put that ad out and someone clicks on that and buys it through that click. We can't do that the same way.

[A]

And do you feel like, I mean, it's kind of hard for you to know almost by definition, but do you feel like the tools of tracking are basically equal amongst the big five publishers or is one of the publishers more data driven one more field driven?

[B]

I honestly don't know. And if I did I'd go to antitrust jail. So the end, which is a big thing in our world still. My instinct is, of course like anything else, some are probably better than others. I think we're probably somewhere in the middle.

[A]

What are the pros and cons of being in New York? I remember I had this experience many years ago. I had a meeting at Penguin Random House. No, that's not true. I was going to interview Ryan Holiday and we did it at the Penguin Studios. And I remember I got off the Q train or something and I was on my way and I saw Universal Music Group and I saw, I think I went by CBS on 53rd and 6th. It was something like that, right? And I just had this moment of being like, oh my God. Goodness. The home of radio, the home of tv, the home of books, the home of music. All right here. This is crazy. Within a few blocks. And then at the time I was living in Texas and I remember going back and having this distinct sense that, wow, culture in New York is so different from culture in other parts of America. And so on one hand the benefit of being in New York is you're right by everybody. You know, you can easily just pop over four blocks and talk to somebody else who works in the industry. There's parties for people there. And at the same time, New York is one of the most different places from the rest of America and the rest of the world. So how do you think about the advantages and disadvantages of being here?

[B]

I think about it all the time because there's a little bit of a bubble effect, which is essentially what you're saying. Totally. And that's good in that you have a lot of people in like minded areas, you know, working towards similar things. So there's an energy, there's a scale, there's an excitement around it. But then also we miss. Sometimes we don't know what we don't know or we're missing trends. I personally believe a reason self publishing is so big is that traditional publishers were just not seeing trends that happened or that were developing outside of New York. So here's a great story. Years ago when I was running the children's division at Macmillan, we, we were seeing that there was sort of a rise in self publishing and we wanted to acquire this book and it didn't happen. But what we realized in that process was there were a bunch of people out there reading things or wanting to read things that we weren't publishing. So we created something at the time called Swoon Reads. We ran it for a few years and it didn't work out exactly the way we wanted, but we've had some great successes with it.

[A]

Yeah. What do you think is the downside of being data driven? Right. So much of the world has moved towards data driven, moved towards the kind of Reddit style votes and data driven. You know, if you, if you walk into a boardroom you say, hey, made a data driven decision. That's like an unequivocal good. But let's poke holes in that. What's the downside of it?

[B]

Well, I wouldn't say it's an unequivocal good. What I always say is I want all the information so I can make a gut decision.

[A]

Huh.

[B]

And I believe it. Yes, I like information, I like data. But there's an element to what we do that is still feel if you. I haven't seen the algorithm yet that can identify the outlier. And the biggest books we have are often the outliers. I mean, you go back through history. Harry Potter is the best example. Almost all the New York publishers, I think all New York publishers but one rejected that book.

[A]

Is that right?

[B]

Yeah. And that's not the only book that that's happened to. So that's the outlier.

[A]

What do you make of that? Is it Just so hard to know what's going to resonate.

[B]

Yeah, I mean, if I had the crystal ball, I would have used it a long time ago. Right. Things that we think are slam dunk winners don't work. And things that we are like, ah, this will be nice, you know, turn out to be huge successes. It happens all the time. And yeah, there's a lot of stuff in the middle that we get pretty close to. Right. But that's also what makes this business fun. If it was, you know, plug and Play, I think we wouldn't like it as much. It's that creativity isn't an algorithm. It's just not. So, yeah, I want that data. I want, I want to ab test my, my ads. I want to maximize my metadata. I want to make sure that I know what's working in the things I control. But I also have to be realized that there's magic to the outliers and there's magic to creativity. And if you get the right editor who just has that feel, you got to go with it.

[A]

Oh, tell me about that.

[B]

I mean, I've had this throughout my career. There have been people that are like, well, why did you let her buy that book? I'm like, you see the other hundred she's already bought that have been huge successes. Maybe this one won't be it, but her track record's great. She knows how to deliver. Doesn't mean it's going to happen every time, but there's certain folks that just know how to look at a book and make it the best it could be. But maybe even more importantly, know how to read through something and say, that's the next thing. And I think we're losing that a little bit too. I think the way to do that is you got to read a lot. You got to read a lot about the competition. You have to be out in the world. And it's becoming harder and harder to do that because we're publishing a lot, lot of books and the marketplace is crowded, but there are certain editors that just have that innate ability to know and, you know, yeah, you're not going to give them carte blanche, but at the same time, you're going to give them the benefit of the doubt when they're coming asking for money.

[A]

We were talking earlier about risk, and there's almost two sides of risk, right? There is the, hey, I want you to be. Take more risk. Take more risk. The problem is you're a business. You need some sort of predictability. You can't have super high Variance. When you think of your fixed costs and there are stakeholders that you specifically report to and you need to deliver them financial results. And then on the other side, there is the.

[B]

What?

[A]

This would be my critique of Hollywood that a lot of people feel the rise of sequels. Oh my goodness. We're just sort of regurgitating the same thing. The risk tolerance is getting lower and lower. People are looking more at the franchise maybe than the underlying quality of the content. And that's not risk averse enough. How do you think about the trade offs between those two?

[B]

It's a really good question. It's something that we struggle with. I think at McMillan, one of the benefits we have is we focus on the books, we focus on authors. We also were a privately held company. We have two shareholders. We're able to have a long term view of things. Who are the shareholders? There are two folks in Germany. It's Stefan von Holzbrink and his niece Christiane Scholler. So they're the owners, they have a passion for what we do. So they enable us to take a little bit more of a long term look. I mean, look, it's a gift to not work for a publicly traded company in a creative business. Because creativity doesn't work on a quarter by quarter basis.

[A]

Right.

[B]

It just doesn't. So that's something that I don't take for granted. So we invest in authors, we invest in the books themselves. We believe we have a personal touch in how we do it and that creates an atmosphere where we think we can have success. And maybe we could talk about it now, we could talk about it later. But the concept of, of creating an atmosphere where creativity can thrive is, I think, my biggest job.

[A]

Tell me about that.

[B]

You know, so my background is business side. You know, my grandfather was a professional musician. I played music, so I have creativity.

[A]

What kind of music you play?

[B]

I was a guitar guy. I played, you know, blues and classic rock, you know.

[A]

Okay, cool. Who are your favorites?

[B]

Well, I mean, you know, B.B. king Albert King in terms of the straight blue guy, love Stevie Ray Vaughan. But then I'm also a big Pink Floyd fan, so. And then, you know, then I came, you know, child of the late 80s, early 90s. So, you know, Nirvana, Pearl Jam, you know, Jane's Addiction, Violent Femmes. So it's across the board. And I love jazz too. My grandfather was a jazz guy. He was a swing guy, but I like that straight ahead bop. So like Art Blakey and the Jazz Messengers. Wes Montgomery, those are some of my favorites.

[A]

Real quick and Then we'll get back to it. What's the best jazz club in New York City?

[B]

It's so hard. I am still. This is old school, and it's more of, I think, history and vibe. I still love the Village Vanguard.

[A]

Oh, yeah.

[B]

And it's just, you know, I'm actually supposed to go out with someone tomorrow night, and I'm still waiting to hear back from her if we're going to go out. She wants to see music. She's only been in New York for a short time. And my immediate reaction was the vanguard. So we'll see if we. If we go. Because it's the quintessential, you know, jazz club experience. It's not a. It doesn't. It hasn't become a venue. A lot of the other places are like a venue here. You can still go in, and especially if you're during the week and almost anytime, if you want to stay for a late set, I guess, buy another drink. You know what I mean? It's. And that's the way I grew up with my grandfather. It's like, you're here, you're listening to music, and you just, you know, keep listening. If you need to buy another drink, you buy another drink. It's not, come in, take your seat, be quiet, leave in 45 minutes. And a lot of places become that. And jazz is interactive, so you got to make sure you have that interactive experience. And great. Creating the environment where that can thrive. Right?

[A]

Yeah.

[B]

So that's what I try to do in the. In. In the publishing space is having that more of a business background is like, you need to create a space where the editors can be their best, the designers can be their best, the market. Everyone could just say, it's about the book, it's about the creativity, and how do we take this to the next level? And the authors, they feel that, you know, when I have conversations with authors, like, thanks for giving me the time to do this, or, you created a really welcoming space, and it matters. And so when I told our owner that. That when I started, you know, over 15 years ago, she goes. He goes, what's the first thing you're going to do? I go, I'm going to create an environment where creativity can thrive. He gave me a little bit of a look, but he's like, okay, okay, I get it. And we had some great success. And then it was 15 years ago, so it worked out.

[A]

What companies have done a really good job of creating that environment, and what specifically have you taken from them?

[B]

I think it changes over time, I'd like to believe macmillan's had it for a very long time, and not just because of me. I think that's been an ethos that we've had in the company for a while. I think at various times. I worked at Disney for a little bit of time. At that time, I did a show.

[A]

You were in their publishing department?

[B]

I was in their publishing division, which was part of consumer products, and I did a little bit of both. But to go to Pixar's campus and to watch how they approach creativity was like, all about the movie, it was all about the story, it was all about the animators. You'd sit there and watch John Lasseter talk about whatever he was going to be doing, and you could see it was 100% about what would end up on the screen. So they got it right, you know, they got it right. And so I think about stuff like that. I think about my grandfather when I watched him on stage, and he knew he could be a tough taskmaster. He wanted perfection. And perfection wasn't getting every note right, perfection was getting the vibe right. So how do you capture that in the setting of a publishing company? That's what I try to be.

[A]

You know, it's funny, you talk about the note versus the vibe. So last night I saw Wicked. And so it's the end of the play, and they had this weird thing where they finish the play, everyone takes the bow, and then a guy gets up and he has this card. It's basically kids night. So with a full paying adult, a kid could get in for free, which is great, but, like, the plays just ended. And this, this. This wasn't quite the vibe that I was going for. But then he goes, when I was a kid, I came here on kids night and I was sitting there in row, you know, 27, and I looked at my mom at intermission. I said, I want to be on stage one day. And my heart was so warm, like, I'm almost, like moved to tears talking about it. Like, it was so sincere and so endearing to hear him talk about it. But you talk about the vibe and the note. He then looks at his paper to say exactly what he needs to say. And it completely killed the vibe and it finished. And I turned to my friend, I said, that is a great example of if you speak from the heart and you're imperfect, it is so much better than speaking from the head and being perfect.

[B]

One of the things that people say about me that is like, the biggest compliment I ever get is like, you're incredibly authentic. We could tell that you're being genuine when you talk, even if we don't like what you're saying. And, you know, that's important to me because I can only be myself, right? And I try to do it with kindness, and I try to do it with. With. With caring and sort of listening to what people need. But being able to bring that is. Not everyone does. And I think in a creative industry, it's quintessential to making people feel good about where they are. Or in publishing, you know, there's an altruistic nature of what we're doing. It's never bad to read. It's never bad. And if we can create an environment where people can, you know, bring. Bring everything they have to the. To the business and do it in a way where they're not scared of making a wrong call, we're going to win in the long run.

[A]

Okay, so we're talking about how do you get your writing done and if you're thinking about work and how you can be more productive there? Well, I recommend a tool called Basecamp. Basecamp is a project management tool. And it's different from the other ones, which are loud and noisy and cluttered. They have feature bloat. Basecamp says, no, no, no, no, no. We're going to keep things simple so that you can focus on what actually matters, which is just getting the work done, you know? Now, for us, Basecamp is a place where we can track what we're doing with how I write, when episodes are being recorded, where we're recording them, the publishing day, all those sorts of things in one place for our entire team to look at. And I had the founder of Basecamp, Jason Fried, he came on the show, and I noticed that he really cares about writing. He cares about manifestos, he cares about great copy, he cares about telling a great story. And him and his co founder, they've written five books, and I can tell you that they bring the same care and attention to detail to their books as they do their software. So if you're thinking about work and you're asking, hey, how can I be more productive? How can I make my team more cohesive? Well, then I recommend Basecamp. All right, back to the episode. There's two places where I've seen kind of formula creep into the publishing industry, and I'm going to be deliberately uncharitable just to be provocative. The first is, and I'll put the. The. The images on the screen like you walk into a bookstore, and it Seems like all the fiction is exactly the same cover. You could look at 50 images, and the titles or the covers all look exactly the same. And I'm like, what is going on? Like, you know, the crazy rich Asians look. It feels like it was just copied and pasted onto 74,000 different titles. And then also, I hope that AI changes this. But there was this formula in nonfiction which was basically, start with the story, make your point, share a few anecdotes, and just do that over and over and over again. And it was so monotonous, so laborious, and it felt like the charge of great writing that used to be there. Like the crazy independent writer we're talking about, Hunter S. Thompson. Like, wow, Fear and Loathing. You've never read writing like this. It's like it felt like maybe there wasn't room for that. Maybe writers were too scared. Like, what was going on? What's going on with those things?

[B]

Well, I think this isn't specific or unique to the publishing industry. For as long as I can remember, when things work, people want more of it, Right? So you're gonna say, oh, that worked. Let's try to do the same thing you said whenever I go. And everything looks the same except for the ones that don't. And those are the ones that don't. Are a lot of times people taking the risk, and that might become the trend of tomorrow. I mean, I remember back in the day when I was at Disney, one of our designers created this cover look that had oversized image of a person's face wearing glasses and a reflection in the glasses. That became the rigor after that for a while. Right. But she was the first to do it. So you need some courage. You need to strengthen your belief in the book and in your marketing positioning. But we're like everything else. People chase what's working for a while, and then you get pressure to do it, too. You know, you might get into counseling. Well, if you make that cover look a little bit more like this other one, I'll take it. Or I'll take. Instead of taking 3,000, I'll take 10,000. So that becomes part of the calculus. And you as a publisher, you have to say, look, I believe this is the COVID that's going to work. And if they only want three, they'll come back for the other seven later because the book's going to work. Or you say, no, this is one where I got to get the books in the store and see what happens. And you're not always right with the call. You Make. But it happens, you know, look at it. Look what you see in Hollywood. Right. You're seeing a lot of things that are just some other version of what you saw before, too. It happens in all creative businesses.

[A]

Yeah. Kind of a weird question to ask, but I think it's an important one. How much should writers be pushing back on you guys? I feel like a lot of writers are scared to, oh, you're the big publisher. What would you tell us?

[B]

Pushing back and depends on what you know. Yeah, I think it's a. To me, it's a partnership, and I think we approach that with many of our books. So we need the author to be there, not just to write the book, but to help promote it. It's more important now than it's ever been. And I think some authors are saying, hey, you know, come on, you got to do some more. You know what? Everyone wants more. We want more. They want more. We got to find that right balance. So I think we should have a conversation, make sure that pushback. I think the healthy pushback is, hey, here's what I'm thinking about the jacket here. You know, in the editing process, you want that, that, that, that, that truthful back and forth. I was just speaking to. To one of our. Our editors yesterday about a major, major author we have on a list and the conversation they're having about editing their next book. And I love the fact that the author trusts her enough to give her the unvarnished truth. Because you know what? Some authors don't want to hear it. Other people like, give it to me, give it to me. And I'm, like, living vicariously about hearing their editorial conversations, and it's really great. So find that balance. Have an open conversation of what your expectations are, what you need from the publisher, what the publisher should have the same kind of open conversation about what we need from them. And you can try to find that balance. And it doesn't always work. Right. Someone always feels like maybe they should have done more. Maybe we feel like, oh, the author's being a little unreasonable. It happens. But I think if you have that open dialogue, it gives you the best chance of everyone feeling good about the process and the book having the best success.

[A]

Right. Talk to me about the economics of a book and who gets the different cuts at different levels and how that changes over time with the different. Going from hardback to paperback to ebook to audible. And then also, as a book becomes

[B]

more successful, the biggest cut goes to the retailer. So if you're just pick round numbers, say it's a $30 book. More than $15 of that is gonna go to the retailer.

[A]

So that's a Barnes and Noble. That's an Amazon.

[B]

Amazon. That's. Generally speaking, we're getting less than 50 cents for every dollar cover price as a starting point. That's the revenue that comes to us as a starting point. And I think I can say that without getting myself in trouble, because it's broad enough. So then the author is going to get a royalty, and the royalty is based on the $30, generally speaking, not the money that we get from the sale. So that dynamic changes just based on the COVID price. But day one book comes out, an author's going to get on a hardcover anywhere usually from 10 to 15% of the COVID price. So you're talking on a $30 book, somewhere between $3 and $4.50 for every copies that sold. This is separate and apart from the advance that we've already paid them. Because the way that. You know this. But the way the publishing issue works is we usually give the authors upfront money. That's considered an advance against the royalties that we will pay them over time. And if we sell enough books to earn out that royalty, we give them more money. If not, they keep the advance that we get them and we sort of eat and that. So that's. Those are the. So the author cost is the single biggest charge. And then you have the printing costs. You gotta print the books. So that'll be the second biggest charge that's coming there. And depending on the length of the book. And, you know, a cookbook costs more to make than a novel. You know, there'll be different dynamics there. And that is probably roughly, you know, that'll be the next biggest cost. And then you have, you know, freight. You gotta get the books from the printer to the warehouse, from our warehouse to the. To the booksellers. That's another cost. And then you have marketing. And marketing is distribution and freight marketing. Probably around the same, depending on the book, maybe marketing will be a little bit less. So those are ballpark. And then that's before any of our overhead. That's before we pay the editors. That's before we pay the designers. That's before we pay for our facilities. So that's sort of. I don't know. I can go into some more detail, I guess, if you want a bit. It's hard to.

[A]

I want all the detail. This is fascinating.

[B]

Yeah, it's true. I mean, I guess, like, put it this way, in the most. Let me start by Saying that having worked in the music industry, having worked in the film industry, there is no more creator friendly business than the publishing industry. The authors get a bigger percentage of total revenue than in any other creative output. Where you're working with a traditional outlet, if you're self published, it's different. If you're working in some sort of, you know, hybrid situation, it's going to be different. But in traditional forms of media and entertainment, there's nothing that's fairer or the creator gets a bigger cut than in publishing. So that's sort of the starting point where I sit. And also the contracts are pretty clear about what you're going to end up getting where, you know, there's always these crazy stories in the entertainment industry and

[A]

they call it Hollywood accounting.

[B]

Right? You got it. So we don't have that, you know, maybe we have this much of it but a small amount, but it's really not, it's very straightforward. So I think that's the, you know, that's the biggest takeaway for me and it makes me feel good because I started out, you know, my entertainment career after I was doing concert stuff as a, as a lawyer representing talent. Right. So I know that in the publishing world we're sort of paying people a fair amount of money. And then what you're left with is the biggest percentage of the revenue that a publisher collects goes to pay the author. It's just really, that's what it is. And over time backlist books are more profitable because we talked about it a little bit early, because you maybe need to put a little less marketing in it. You can maybe be printing the paperback printing costs or less than a hardcover printing cost. You do sell them for a little bit less. So I mean those are some of the big broad strokes of how it goes.

[A]

And then how does all that change per market? Right. So I sell in America, then I go to the uk, go to France, I go to Canada, then I go to India, then I go to Vietnam, Taiwan, whatever else it is. How do the royalties change internationally?

[B]

Well, it depends. I think different markets have a similar royalty structure to us. I think in many of the European markets you might have a slightly lower royalty scale than what you see in the us but it depends on who's selling the rights. As a publisher in the US we often just get North American rights, the ability to publish the books in North America and maybe, you know, some open market territories. Meaning, you know, maybe we can go into Europe, maybe we can go into other places around the world in English, in English Sometimes we get world rights, which means we can sell translation rights around the world. And if we do that, then again the bulk of the share of what we collect goes to the author after that advance is earned out. So you'll have a scenario where it's not uncommon for an author to get 75 plus percent of any money we receive from licensing a book for foreign language translation, which is a typical thing. 50% is maybe in a newbie author, but 75% share to a foreign rights translation license to an author is fairly common.

[A]

How do you think about sequels? So I just had Lee Child on the show. I think he's written 25, 26 Jack Reacher books. So many. And how did the economics of sequels work out?

[B]

I mean, first of all, if people want sequels, you should write sequels. Right. It's out there. And there's different kinds of publishing for different kinds of audiences. And it all depends on what they're paying the author for the book. Right. I've heard so many stories about big authors saying, you know what? I don't sell what I used to. I'll take a little bit less on this one. And that's great. And then when the books maybe take off a little bit, they'll say, well, maybe you should give me a little bit of a kicker this time around. That kind of partnership does not exist in many other forms of media. It boils really on SQL, the profitability boils down to if the market is still there, it boils down to how much the advance is going to be to whether or not the book is successful. And you know what, we take smaller margins on some of those sequels because we know it's more guaranteed. So we say, you know what, this book has a built in audience. The authors developed that. We've helped the author do it. We might say, look, we'll give you a couple more bucks even though it means we might not make as much or we'll make the same amount even though we're selling more copies. It becomes a calculus in your business

[A]

calculation and how much of your business is back catalog versus new books?

[B]

We're about half. Half back catalog. Yeah. And that's probably low in the industry. Definitely low on the kids side.

[A]

Wow. So back catalog is really just huge.

[B]

Yeah. When we say back cataloging, we're talking about everything that's basically over a year old. Right. Okay. That's how we look at it. So you know, we publish a book in 20, in 25. That's considered backlist, you know, right now. So.

[A]

And have There been more, has there been more M and A in back catalog over the years? Less.

[B]

Well, I mean, when you talk about consolidation earlier, a big part, a big driving factor of that is, is backlist. Right? Because yes, you have books under contract and you got to believe those books are going to work, but you're acquiring that, you know, 50 plus percent of the list that you think is tried and true, that's going to repeat. You're almost like buying an annuity. So that's whenever you're doing an acquisition, it's really, it's often driven by, it's either driven by the backlist or talent that you want to bring into the company, either author or editor.

[A]

Let's define back catalog as 10 years or older for the purposes of this right here, right now. How is Marketing different for 10 years and older back catalog versus a new book?

[B]

Well, I mean, it's completely different because the publicity, I'm a big believer in publicity to sell books because publicity is a form of word of mouth. What I talked about earlier, right. So that trusted source might be coming

[A]

in

[B]

a talk show or something that is creating that buzz. So publicity for front list, I think is the single biggest thing you could do is to get the word out. Front list is the new books. The new books, right. A book that's 10 years old, you're not getting it on a morning show. Right. In rare instance, maybe there's a news event or something. So it's really now and I think this is where technology can help us. It's how do you raise that visibility of that book? How do you take that 10 year old book and make it discoverable today?

[A]

Movie TV.

[B]

Well, movie TV is a publicity moment. That's a completely different thing. And yes, we. And then you try to create some moments. So last year we had the 10th anniversary of the Nightingale, one of Kristin Hanna's books. We did an anniversary edition. We created a moment and you know what? It worked and it was great. And people loved the special edition and we made a really beautiful copy and Kristen is actually doing so well. So it was a great way to celebrate her and to celebrate that book. So you could try to. Anniversaries are a great way to create buzz, but outside of that it's how do you maybe tweak that metadata? How do you make it more relevant? So in search, when people are searching for a topic, it rises up. That's how you would do it on a much older backlist title, right?

[A]

Yeah. I'm thinking like if you have a book Like Antifragile by Nassim Taleb or the Black Swan. Every time there's a Black Swan event, you could basically tweak the metadata so that something happens there.

[B]

Right.

[A]

You spent many years working in the publishing industry for kids. How is that market different?

[B]

It's a lot more complicated. For starters, you have four color books make up a big portion of the picture books make up a big portion of the list. Picture books are expensive. There's a different process. There's usually often two creators. Not always. You have an author and an illustrator. Sometimes you have a same person that does both.

[A]

And when you say expensive, you mean expensive for you, the publisher, the to print?

[B]

Yes, they're more. A 32 page picture book costs as much to print as a 400 page novel. Wow. Yeah. So it's. And you charge $30 for the adult novel and you charge 1999 or 1899 for the picture book.

[A]

How are you making up for that margin?

[B]

You don't.

[A]

Huh?

[B]

You don't. I mean you're taking the kids books have a smaller margin and you hope that over time you sell a lot of copies. So the dollars. The dollars work. Yeah.

[A]

And how is the cut distributed between authors and illustrators for kids books?

[B]

Almost always 5050.

[A]

Oh really?

[B]

Yeah, almost always. 50. 50. Yeah.

[A]

And then the other thing I gathered is that kids books, they don't need to sell quite as fast.

[B]

They tend to backlist. When we talk about the older catalog, there's new kids every year. Right. There's kids being born and books that work tend to live longer in the children's space. It's still not easy, but you generally can get a longer life out of a, out of a kid's book where as opposed to like a celebrity memoir. If it doesn't work in the first six months, it's probably never going to work.

[A]

Yeah. It's funny that you talk about the back catalog. I was thinking about why and what my kids read in terms of nonfiction or whatnot. I mean that's their choice. But like they sure as hell are reading where the Wild things are. They sure as hell are going to read Babar and this flight, this book about Charles Lindbergh. And maybe the reason that the back catalog is so good is because parents really want to share those experiences with kids.

[B]

I think so. And this has been a conversation for a really long time now. When are ebooks going to take over the kids book space? And we had a little bit moment, call it a decade or so ago, where ebooks were Getting some traction. And we still sell kids ebooks, but it's small compared to the physical books. And it's still something about cuddling up in bed with a device as opposed to a book. And I would have thought that it might have changed a little bit more by now, but it just had. Like, my daughter's gonna be 19 this year, and so she's not the best sample because both me and her mom are in publishing, and so she had books in and around her life. But she, her friends, the people her age, they still have the same connection to physical books. They're not embracing. They'll read stuff digitally, they'll read on their phone all the time, but there's still a connection to the physical book. And I think that's gonna, you know, if she ever has kids, I think she's going to be whipping out, you know, you know, one of the. One of the classics and reading it in physical form next to her kid in bed as opposed to on the phone.

[A]

Oh, 100%.

[B]

I.

[A]

You know, I don't have kids, but I stayed at a friend's house in Austin on Saturday, and it was the end of the night. And they do a. They do prayers every night. And so there's all these. There's all these books with prayers and songs and whatnot. And so the daughter name is Cece, two and a half years old. So cece gets to pick, right? And she has so much fun flipping through the book and looking for it. And that moment is both so much more intimate, it's so much more personable and friendly, and it's more intuitive for her flipping through the books rather than. You go on a screen, you ruin the entire experience.

[B]

I mean, I love picture books. It was sort of like a dirty little secret of mine because, you know, they had a moment when I started McMillan where it was a tough market. They've come back, and they're still great. I absolutely adore picture books. I've loved, when I got the job at macmillan running the kids division, my buddies from college like, oh, man. You get to do what you always liked for a living.

[A]

Wow.

[B]

So that's how. What do you love about them?

[A]

What do you love about them?

[B]

There's so many things. First of all, they're beautiful, right? And they're physically beautiful, but the storytelling is incredibly complex. Any kind of illustrated book, there's really three types of storytelling. You have the words, you have the images, and then you have the space between. It's almost like you have to be a director when you're seeing what's coming next. And all the illustrators, all the picture book people will talk about the mystery of the page turn. What happens when you see what's on the right side, which is not the next page? Right. You're flipping the book. You see the right side of the page first, but that story continues on the left. How do you make that tie together? It's truly magic. And then there's space between. Right. You have to figure out, oh, they just showed me this picture. Now the story's moving on. What happened to get there? And your brain is processing that and the kids brains are processing it. So I just. I absolutely adore it.

[A]

What are your favorites?

[B]

I mean, it's. You mentioned one where the Wild Things Are.

[A]

Yeah, right.

[B]

I mean, it's hard. We don't publish it, so it's hard for me to say it, but it's a classic and I was lucky enough to publish. When I was at Disney, we published Maurice Sendak. So it was really nice. We did the Brundabar book with Maurice Sendak and Tony Kushner. So that was really great. When I started at Macmillan, I was very fortunate that we published the Call the Cut winner. I started weeks late. I mean, I started like the first working day in January. And two weeks later, they announced the ALA honors and we won for sick day for Amos McGee. And what's so great about that story is it was a husband and wife team that did the book. He wrote it, she illustrated. Phil was the. It's Phil and Aaron Stead. And Phil is also an illustrator. And he basically wrote this book for his wife to illustrate.

[A]

Wow.

[B]

And she. And it was her. And it was her first book. And it won the call of the highest honor we have for illustrated books. And it is just a marvelous, marvelous book. So that's another one of my favorites. And I mean, we can go on and on, but let's just stick with those two.

[A]

Man, you love children's books.

[B]

That's cool, man. Yeah, I know. It's interesting. It's a complex business. And I'm the third CEO in a row at Macmillan that was a children's book publisher at one point in their career.

[A]

What do you think children's books authors understand about the human psyche that novelists, nonfiction, you know, more prose style writers might not.

[B]

I don't think they understand anything more. I think that they get to be the inner child more, which we all want to do. And adult people in any form of adult media don't always get to embrace their inner Child. So children's publisher, children's creators do. But I think the one commonality that every children's creator has is they treat the kids with respect. They never talk down to the kid. They know how smart kids are. They know how insightful and empathetic kids are, and they play to that. And they take advantage. Take advantage of the role, but they take advantage. Meaning they help kids celebrate that. Yeah.

[A]

Why do you think Waterstones has remained so successful relative to Borders, Barnes and Noble? I mean, I go to London and Waterstones is everywhere. And also Waterstones rocks. Like, there's the Piccadilly Waterstones, four or five stories. And maybe this isn't fair, but I think it's true. I'll be honest, I never really enjoy going to Barnes and Noble. Like, I don't go in there and have, like a great experience. It feels like very. Just feels like super mass market. I rarely find super interesting books that I wouldn't have found otherwise. I walk into Waterstones, and that is like Disneyland for books. It is fantastic.

[B]

So I don't know, this might be a spoiler. The same guy runs both stores.

[A]

No way.

[B]

Yeah.

[A]

Okay.

[B]

James Daunt is the CEO of both companies. Did I doubt him on the show?

[A]

Wait, is that Dot from Do Books? Yeah. Boom. Okay. I love Dant Books. The Daunt Books in Marylebone is one of my favorite bookstores.

[B]

Oh, that's a great story.

[A]

But even more okay, then I doubled down on my question. My question got 10x more interesting. How can the same guy run both And Waterstones is so much better than Barnes?

[B]

And I think you got to bring him on the show and ask him, because I think I know what he's going to say, but there's no way I'm going to give you his answer.

[A]

Okay, well, here's another international question. Why is it like, this is my take. When I look at American books, they're so loud. They're so, like, they're so blunt almost. It's like punching you in the face. Like, business really dominates. I go to Montreal, I go to Paris. The books tend to be way less artistic. They tend to be gray, black. Like they're not screaming for your attention. And then I go to England, and England has these very beautiful artistic versions of books that we don't quite have in America to the same degree. What's going on with that?

[B]

There's. Particularly with French and French based companies, there's always been incredible amount of care and interest in the art of the book and the art of bookmaking. And they have an economics that works for them. There. There's, you know, I can't remember if they still have price stability at books, but they used to. That helped keep prices up and kept some margins higher for publishers, so they could maybe invest more. Don't know if they still have that or not, but historically that was part of the reason. And I do think there's different aesthetics. I mean, you go to the UK and the covers that they put on our book sometimes, like, I can't believe that's going to work. But you know what, it works for their market. It absolutely does. So, you know, I'm not going to be so arrogant, say, well, you don't know what you're doing. You got to use my jacket. That's part of what the publisher has. The publisher knows their market. How do they make that book work for their market? So it's different sensibilities. And I don't know. I mean, a lot of people, I've heard people say Americans are loud and in your face. I don't know if it's true or not.

[A]

I would like. Might be more true than I would like to admit. Tell me about AI. I think that the. Once again, I might not be charitable, but I'm trying to be uncharitable. I'm trying to be provocative here. But it seems like. It seems like the party line is, AI is bad. Don't use it. And then also, humans are always going to be better than AI. There's something special about the human in the publishing loop. But also, if that's true, then why is there so much fear around it? And those two things don't quite logically work. So how do you respond to that?

[B]

There's so many things going on. First of all, anything new, people get scared of to begin with. So it's a human nature thing. I think it's even more so in publishing. We tend to be, okay, let's wait and see approach. And that's happened with everything. So I think that's what's happening with AI right now. To starters, we talked about outliers earlier. If AI works on algorithms and basically predicting the next word, that's going to happen, that's what chatbots do. And maybe with further advances and, you know, it could change. But the outliers is where the beauty comes. And I still think that outlier is a very human thing. I mean, I was a Star Trek fan, and there was this one episode where Data and Geordi were sitting there talking to each other, and Geordi was trying to explain to Data was asking about. I don't understand the expression a watch pot never boils. He goes, whenever I watch it in 212 degrees, it boils in 1 minute, 33 seconds every time. And Jordi says, turn off your internal carometer. And then you have that human part of it. I think that's going to continue in books. Does that mean that we can't benefit from AI? Absolutely not. We could absolutely benefit from AI. One of the things that editors. And it usually falls on the junior folks, the assistants, they hate writing tip sheets. No one likes it writing tip sheets. It's a summary of the author, the general specs of the book, the author's demographic background, and maybe a quick summary of the book. And it's either a TI sheet, a tip sheet, a sell sheet. It's what we need to populate our database with the book information and what the salespeople get to sort of set them up to sell the book. And as bisec on it as well, which is a code that we use to describe genre and sub genre. It's something that's used throughout the industry. Tell me more bisec. It's just. I don't even know how many hundreds of codes there are. There's really hundreds of codes that, you know, you'll get, you know, you'll have one code that'll be like, romance, and you'll get, you know, gay. Paranormal romance could be one subcategory. Or, you know, you know, realistic, you know, romance could be another category. So we have numbers that are assigned to it to help, you know, catalog the books and help identify, you know, what. What they are.

[A]

Back to A.I.

[B]

yeah, so back to A.I. for two things. One, the tip sheet, first draft of the tip sheet could absolutely be created by AI and then have a human go in and fine tune it. Also, you may have. So metadata is another thing. When we put a book up online to sell, there's a bunch of keywords, a bunch of information that we're doing there to try to raise it up in algorithms. AI might be better at that than us. It doesn't remove the human element, but it absolutely gives you a good first draft and maybe even a good second draft. And then to have AI regularly monitor what's working. So the keywords that work today might not work a year from now. So we talk about that back catalog again. Maybe AI could tweak those keywords so the book can get more discoverability down the road. These are all things that we're not doing now. It's not going to take anyone's job away. And that's another fear. People think, oh, it's going to take my job away. I think there's a better chance. The line goes, it's a better chance that you lose your job to someone who understands AI than you lose it to AI, because it's just another tool. I mean, we don't have the typewriter where we grab the lever and swing it across anymore. I mean, some people use it, but we don't. We use word processors. I think that's what AI could be. Now at its worst, it could be bad, but almost any innovation at its worst could be bad. And I don't know, I guess I'm probably more of an optimist than I tend to admit. And I think this is going to be a tool that can empower us to spend more time on the human aspects, the strategic aspects, the fun aspects of what we do. And, you know, that's good.

[A]

Let me give you a thought experiment and I want to hear your response from three different sides of who you are.

[B]

Okay?

[A]

The creative, the business guy, the lawyer. Okay, so here I am, I'm giving you a book. I've just finished it, and let's assume it is a fantastic book, like it is a top 1% book. And you say, did you use AI to write this? And I said, I wrote the first draft. I went in after and I followed what AI said. I had directed AI to do this, but AI's hands are absolutely all over it. And actually, Gemini Claude chatgpt, I cited it as my co writer. What do you say?

[B]

Oh, my God, this is the hardest question I think I've been asked.

[A]

So creative person, creative business lawyer, I want to hear from all three.

[B]

So the creative person would be like, I think that I'd have very mixed feelings as a creative person. I'd be like, you know, part of me might think you cheated. Part of me might think that if you're citing AI as a co author, that's so much. So that really. Is this you or is this from someone else? That would be the creative point of view. The business person and the legal would be very similar, actually, because the first thing is it's very fundamental, it's very basic. Our copyright law does not protect things created by AI.

[A]

So if it's been created by AI, you do not own it.

[B]

At Macmillan, no one can own it. It's not subject to copyright protection. So now, as a businessman, am I going to invest in something that has zero barrier to entry? If I publish that book tomorrow and it's deemed not to be covered by copyright. Everyone else can publish a different version of that book.

[A]

And at what level is it not copied by copyright? Like in page 297? I redid the third word in sentence ver 21 on that versus this was written by AI Chatgpt.

[B]

Well, this is, there's no, there's no clear line for this. And that's the problem. You know, there's a, there's a test and I, I just honestly can't remember what the phrase is. But it's along the lines of, you know, substantially created by a human. You know, the, the copyright only protects works that are. I think it's substantially created by human. But you can't quote me on it. I got to get the, the exact information. But there's a test and it's not a bright line.

[A]

So then if I come in and I'm going to work with you, do you have to basically look me in the eye at this point and say, did AI write this? How did you use AI?

[B]

Well, in our contracts forever. And I don't think this is different for most publishers or any publishing contract I've ever seen where the author makes a representation that the work is their sole creation and then they make a representation that they will identify any parts there aren't. So here's a perfect example. There are plenty of books that might have a song lyric or might cite someone else's book. Part of the editor's job is to identify those. But really it's the author's job to say, hey, I quoted so and so here. And for fiction as well, right? You've seen it. So this hasn't changed. And I mean, I've been working for publishing companies for the last 25 years. I've been in the entertainment business for the last 35 years. This is no different than it's ever been.

[A]

So then back to our thought experiment. So now I'm sitting down, I'm going to write a book. John, give me some advice. I'm going to use AI Want to use AI how should I be working with AI how should I be tracking? Do I need to be tracking all the AI that I use? How do I do this in a ethical way that speaks to your creative side, the business side, the legal side?

[B]

I think it goes back a little bit to what we were just talking about a couple of minutes ago. If you use it as a tool, a great example would be a research assistant. If you used AI as a research assistant, you said, look I've read these 10 books and you had permission to dump them into AI because that's a whole other thing. And you then query, you say, okay, my theme or that I'm trying to get across is this, or I'm trying to get documentation or trying to annotate this thought. AI could help you find that way quicker than having to read through all those books again. That's a fine use of AI I think that's no different than being able to scan an ebook. Right.

[A]

I would call that Google on steroids category.

[B]

I guess that's fair enough. So that to me is. That's a tool for fiction. It might be. Maybe it's a thought partner. Maybe it's like, hey, here's my manuscript. And then you can start querying the chatbot to say, Give me your $0.02 on this character development or something. Maybe that's a good example. But I don't know. I haven't given this incredible amount of thought. But those are things that just come to mind about how you could use AI to maybe sort of as a tool.

[A]

What are the things that keep you up at night? Like, what is, what do you like to think about in terms of, hey, where's the industry going Here are the fault lines that it could go this way or that way. Like two roads converged. Like, just go this way or that way. Like, what are you thinking about there?

[B]

Well, it's also. What's going to be the next romantic. What's the next big thing? I mean, if you would have told me.

[A]

So it's about content.

[B]

It's. Yeah, that's the first thing.

[A]

Yeah.

[B]

If it's, if it's about. If you would have told me 10 years ago that paranormal would be back, I would have been surprised. But it is, it's back now. And it just has a lot of romance in it, you know, a lot of sex in it. So what's old could be new again and what's that next thing going to be? So that's, that's always a question for the industry. And if you, you don't always have to get there first, but it doesn't hurt, right? And you have to make sure you get there. You know, if we weren't doing romanticity at all, our business would look very different now. We happen to be very good at it. So that, that's, that's one thing. There is no question that there is more connection we're having with data and information. We talked about data earlier and we have limited access to data. I think that's going to be changing more and more over time. And how we use that is something that we have to get up to speed with and figure out how to make it part of our business. And you're seeing some folks out there doing a little bit more with it and it makes a difference. So that'll be something that I think is going to happen next. In publishing. We talked about AI just a moment ago. I think another place that AI could be really great for us is doing demand forecasting. You know, we have to print these books. We got to print them before we sell a single copy.

[A]

Right.

[B]

And if we get that, that number wrong, we're eating that cost. And then those books get thrown away, which isn't great for the environment. So using AI and we've already started doing it, by the way, at Macmillan and we're. And we've. Last year alone we estimated we printed 1 million fewer copies based on our use of AI and in demand forecasting. And that saves a lot of trees.

[A]

Wow. How about that?

[B]

Yeah.

[A]

Walk me through the print. Like, how do a printing center work? Like, I don't know that it seems like books get magically printed, I guess,

[B]

all of these stories printed.

[A]

Like, does Santa bring them every year? Like, gives them to Barnes and Noble? Like, how does it work? That's Santa's side hustle. Yeah, right.

[B]

Bringing the books. Right. We edit the books, the books get designed, and then they go out to a printer to be printed. And then we have. There's facilities all over the country that we use to print our books. We have multiple companies that we work with. We print some in Asia as well. A lot of the four color stuff happens in Asia. Some happens in Europe. Four color, the picture books, the cookbooks, you know, any, you know, when you

[A]

say four color, does that mean. Because there's black, red, green, blue or something.

[B]

Okay, exactly, exactly. Or as opposed to a novel, which is one color.

[A]

Ah, now I get what you mean.

[B]

Okay. Yeah. So. So we, we print those books in various facilities of people. We've had relationships, obviously, honestly, for years. In many cases, they get shipped to our warehouse. We have one warehouse in the U.S. it's in Gordonsville, Virginia. And we've had that warehouse for over three decades now. And then those books go from there to retailers around the country, around the world, actually. Many retailers choose to use an intermediary to help organize their books and organize their book section and help them get books packaged and delivered to them in a way that makes it easier for them to fill their shelves. So readerlink plays that role for many mid sized and regional mass market stores and they do it for Target and Walmart for that matter. Ingram's another distributor. They're historically been selling books to the independents. They're also starting now to sell to Walmart as well. And again we ship tractor trailer loads of books to these folks and then they get them out to the retailer themselves. Independents will use USPS or UPS or some other form of packaging.

[A]

Who should be self publishing?

[B]

That's a really good question. I mean the easy answer is if you can't get a publishing deal, you should try self publishing. I think there's no easy answer. Because of this, some people should start out self publishing and when they have success it probably makes sense for them to come to us to do some of might not make sense for them ever to come to us. It just depends more often than not over time the self published folks, there's a burden to doing self publishing and none of them really get the print side systematic. It's hard doing ebooks now, even maybe doing audio, they could do that on their own. But getting the print books and getting them into the stores, it's not an easy thing.

[A]

Because self publishing as a percentage is way more ebooks than physical. Right.

[B]

I mean it's almost hardly any physical, right? Yeah, even this. Like I was just looking at numbers for a super successful self published author, well over 95% are ebooks. Wow. Yeah. And for us on a best selling fiction, maybe 30% will be ebooks.

[A]

So then the pitch to like if I'm here and I'm a super boneheaded crank, like I gotta go self publish. And you're like okay, just hear me out. The reason to work with a more traditional publisher is there's a million reasons.

[B]

For starters, we're going to give you an advanced. So a lot of people can't give up their day job, they don't have the ability to work at night. We're going to help finance you, we're going to give you money upfront so you can spend some time to get that book done. We have expertise in printing, we have expertise in marketing, we have expertise in distribution, we have expertise in editing. And I think you know from listening to your show, the editing process matters.

[A]

Yeah.

[B]

So you don't get that on your own. Now you could you go out and hire a freelance editor? Sure. I say we got some pretty good ones, there's some pretty good freelance ones out there too. But all of that becomes part of a package that we're really good at. And when you add all that up, I think it's a lot of value.

[A]

Tell me about the marketing and how has the. What matters in marketing changed? You know, like, there's a book about David Foster Wallace that I really love, and it became a movie, I think, called the End of the Tour. And the whole premise of the book is that he's going to give different speaking talks in bookstores around the country, then going on radio shows. I have a sneaking suspicion that's not the best way to do marketing anymore. James Clear, when he published Atomic Habits, went on like 78,000 podcasts in the first week. Recorded a bunch, had the embargo boom. And I'm not sure that's the best thing to do anymore. What guidance do you have for authors doing marketing and how does it change based on their genre?

[B]

I'm not sure it changes based on genre. My approach to marketing and I put publicity and marketing in the same bundle here for this. Part of the conversation is you have to identify the community you're trying to reach. And then my line that I've been using for as long as I can remember is you identify that community and then you identify the connectors, the evangelists within that community, and then you empower them to spread the gospel. And that's that word of mouth who

[A]

are 12 apostles, right?

[B]

And so that, to me, that's how every campaign needs to start. And there's also a great line. The best way to market, figure out how to market a book is to read it. The book will also tell you what are the hooks, what are the things that will be interesting to that community? And then you have to go maximize that. And the tactics are going to be different for every single book that you do. But I think if you approach it from who's the audience and what's the best way to reach them and really reach the people in that community that can help spread the word for you. That's the way to get the most out of your approach.

[A]

Who do you think has done a good job of this recently?

[B]

Well, we've done a great job at St. Martin's Press and at Tor. I think those are two examples. Our entire company thinks this way about marketing at this point. So I name those two because they're two of our biggest imprints. But it's happening across our entire organization. This is how people approach marketing. And, you know, we're better on some books than we are at others. And we get it right sometimes, and sometimes we're not. We're not quite as good. But I think also the key now with, with marketing is quickly changing when you're doing something that's not working. And we do get enough feedback that we can say, okay, that that ad campaign didn't work, or maybe that that channel, that, that area that we're targeting isn't delivering. Let's, let's pull off that and spend our time somewhere else.

[A]

Tell me about marketing from your side of the house, which is, as I see it, you have a portfolio of books, presumably you have a budget, a marketing budget. And then what you need to do is ramp up and down what books you're going to prioritize based on that budget. Is that right?

[B]

Pretty much. I mean, we set a budget and then the publisher and the publisher set the budget themselves. We give each publisher a marketing budget based on their projected revenue for the year, and then they decide where to spend it on. And I think the general rule again, and one of my guiding principles, are you spend money. Marketing is about one thing, it's about roi. It's all it is. So where do you spend the extra time? And I'm using time here because money, yes, it incredibly matters, but we can never get time back. Maybe we, if we overspend in one place, maybe I could find another thousand bucks to give them. I can't get that day back.

[A]

Right.

[B]

So where, where do we, if we spend a disproportionate amount of time, where do we get a disproportionately good result? That's how I think we, that's how we think about the, the exercise.

[A]

You have the private ownership in Germany to two owners. And there, presumably there's a demand for financial return, but also there's probably demand for cultural cachet, cultural impact. How do you think about the trade off between the tangible and quantifiable financial part of your job versus the intangible, unquantifiable culture part of your job?

[B]

I don't think about as. I don't, I don't. I just do it and I'll tell you. So here's the story that goes with that. I was interviewing for my job to run the kids division, you know, 15 and a half years ago. And I said to John Sargent, who was going to be my boss, he was interviewing me for the job, former CEO of McMillan. I said, John, look, I've worked in really big publicly traded companies. I worked in really small privately held companies. I've never worked in a really big privately held company like Holt Spring McMillan. How do you measure Success. And he goes, I'll give you the answer they gave me when I asked that same question when I was interviewing for my job. And he said, we got to make some money, but we never managed to the last nickel. We got to win some awards, we got to get on some bestseller lists, and most importantly, we got to publish books and make a difference. And the company's lived up to that every day that I've been there. So that is, I think, part of our DNA. That's why there's people at McMillan for a long time, and we embody this. And, yeah, we can't just all we need a return. It has to be a reasonable return. They're not looking to squeeze every drop of juice out of the orange. And we got to win some prizes. And I think when everyone knows this and we're all feeling it, it's part of our DNA at this point at the company and the newbies pick it up real quick.

[A]

What do you do all day?

[B]

I just put out fires.

[A]

Really? I mean, it seems like is your job pretty reactive?

[B]

It's more reactive than I would like. I think that, you know, there's always something coming up, and part of it, part of it is reactive because the people do want me to be a sounding board, so. And I wouldn't change that for a second. So I like that. So a lot of it is reactive, but of course, we're setting the strategy right. We're saying, here's the things we want to accomplish for this year. How are we going to go about doing it? And we're never draconian about it.

[A]

Like, what are the things you want to accomplish?

[B]

Well, I know I want to upgrade our tech. We have technology infrastructure that's a little dated, so I want to update that. I know that we built Bramble over in our Tor publishing group a couple years ago. What else could we be? And that was to take advantage of Romanasy. What else can we be doing to do it? I know we under index in business books. How can we grow the business side of the business and everyone at the same time is, what's the next trend going to be? So I'm having conversations around this all the time.

[A]

And how do you look for the next trend?

[B]

I wish I knew the answer to that. You keep your ear to the ground. You have your editors that are out there saying, okay, here's what I'm seeing. We're looking at some. I think monitoring self publishing has been a good way to maybe see what's going to come next. So we're doing all these things.

[A]

We're talking about the AI thing. And I was gonna go see the Gatsby musical this week. So I watched both the Gatsby movies, the Robert Redford one, the DiCaprio one.

[B]

I've never seen the Zicaprio one. I've seen the Redford one many times.

[A]

Yeah, it's fun. It's fun. There's strengths of both. And because of this, I was on the road and I was gonna have to listen to the Great Gatsby audiobook. So I'm in an Uber, I'm in Santa Monica, and I. I buy the. The audiobook, and it says, this has been an automated Great Gatsby audiobook. You know, edited for clarity and stuff like that. And I was like, f that I am so out. Like, I don't care how good the audiobook telling is. I'm listening to a human being. And how do you think about AI audiobooks? How do you think about guest audiobooks in terms of a performer coming on versus. Nah. The author. You, David, you gotta read this one.

[B]

I think there's so many parts that I think for memoir, it's really important when the author reads it. Is it required? No. But particularly celebrity memoir, to have someone else telling you that person's story. I think it's a little rough. There's been examples of where it worked. But, I mean, we published Jeremy Renner's memoir last year, that story about how he basically died on his driveway. And hear him tell it, I don't know how he got through it, let alone how powerful it was. So that's huge. I mean, we did Matthew Perry's memoir. Unfortunately, he passed, but he read that. And what was neat about that? I read that one. I went back and listened to it later. But when I read this book, I'm like, it sounds like he's sitting on the couch just telling me his story. And then in the audiobook, he is. So that kind of stuff. I think it's really important if the author. And even we did Careless People last year, which was the meta whistleblower, and she is not an actor. And her audiobook won awards, and she did an incredible, incredible job reading it. And the audio is the form. I mean, they're selling great, both physical and audio, but the audio is really holding on at a very high level. And she was the first time she ever did an audiobook in her life. But it's her story. She wanted to tell it, and it made a great difference. So I think that matters for fiction. I think you don't need the author to read fiction. In fact, there's a skill there that you might want a professional narrator.

[A]

Oh, I just watched this video of the guy who did the Lord of the Rings audiobook and he gets into all the different voices and you just watch him and it is mesmerizing.

[B]

Yeah, it's incredible. These folks are. And the audiobook today is so different than what it was 20 years ago. I mean it's. They're so, so incredible, these narrators. I just listened to My Husband's Wife. It's Alice Feeney's new book that we published last month and she's having an incredible start to the year because the

[A]

Netflix show My Husband's Wife is the name of the book. Okay, I was very confused.

[B]

My Husband's Wife is the name of the book and it's a good one and it's a multi voiced narration and so it's part of the show. So I think those are great elements. Could there be a world where it makes sense for an AI narrator? I could see instances where that matters, where that comes into play too. I think on the Great Gatsby. I think it's public domain now. So someone just did a cheat, I believe to make it happen. But there's a lot of people also. We had a great instance where we had a backlist title, back catalog like we talked before. Where we did it, I don't know, 10, 15 years ago. The narrator was. His voice wasn't the same anymore. And the author wanted to redo a section of the book. So we had AI, you know, clone the voice from the original recording and do that section. And we got some blowback for it. But I think that's a complete. And everyone. We didn't hide it. And that was a. I think that's a great use of AI for it. And the other piece is it's expensive to make audiobooks and there's a bunch of books that we publish that never find their way to audio. If we can come up with a high quality audio to get those books out in the world, that's not a bad idea. And if they start taking off, who knows, maybe we'll re record it with a human. So I think there's elements there for across the board for how you approach audio.

[A]

I want to talk about literacy and I feel like there's two kinds of literacy. The first is there is the measure of just how many people can read. So how many people can look at a book and read what's going on that's like, hey, you need to be literate. I'm actually less interested in talking about that. I want to talk about the other kind of literacy, which is basically like, I have a friend who is a college professor and he's been teaching, I think he's been teaching that for 25 years. And he said, with pretty high conviction, he said, me, he's a humanities professor. Me and all my colleagues, we feel like people have gotten less literate in that way. Their ability to read deeply, to analyze a text, to focus. Frankly, I feel like I've gotten less literate over the last 10 years. I've become super distracted by smartphones and all that. I'm not proud of it, but I think it's true. And what do you make of that culturally and then also for the future of the publishing industry, like if people struggle with attention span, maybe they're not going to be buying books like they used to.

[B]

I think that's a, it's a very real fear and it's particularly acute in kids. You know, you're getting kids in that third and fourth grade age when the time you want them to become independent readers and to really enjoy reading, saying they're not reading at all, saying they don't like reading. And you know, stereotypically, a lot of boys used to be that way, but now we're getting it with girls too.

[A]

Wow.

[B]

And the data showing that both boys and girls are reading less, they're both saying that they like reading less and it's way worse for boys. But it's happening with girls too. And I think that's existential for many reasons, but particularly in our publishing world. If kids don't read today, the chance of them growing up into adult readers, it's less. Also, it has a huge impact on our society. There's no better way to become, to develop analytical skills, develop reasoning, to be able to discern what's going on in your life than reading. And also, a lot of research over the years shown kids that don't read at grade level by call it third, fourth grade in the US that they're less successful in life than people that do.

[A]

So what's going on? We're seeing this decline of literacy on one side and I feel like the data's pretty clear on that, that people are reading less. But also it seems like the book publishing industry is growing. If I want to understand the publishing industry better, what books should I read, what journals, publications should I be looking at? How does one go about understanding what's going on here.

[B]

I used to get this question about the music industry. I got a little bit about film. I just touched film by an instance. But I don't think there's a great one stop shop to get that answer. I think the best thing to do is immerse yourself in the culture, immerse yourself in the trades. Look at Publishers Launch, look at Publishers Weekly, see what people are talking about and figure out a way to build yourself into the community. Go to organizations. If you're a writer. SCBWI is a great organization. The AAP has outreach occasionally. The Children's Book Council has outreach. These are all ways that you can try to bring yourself into the ecosystem.

[A]

Do you think about your portfolio like venture capital in that there's just going to be. Most of them aren't going to be hits, but then the ones that work are going to be so successful that they make up for all the others?

[B]

Not exactly. But there is a truth to that. I mean the big hits do carry a lot of weight and we don't build our list for that. We're not going out and buying, you know, spending huge money on, you know, on the list, hoping that one, you know, that one out of ten works. But there is a truth that the top books do carry a lot of weight.

[A]

Yeah, yeah.

[B]

But we know if I. The ecosystem isn't such. Because the wins aren't even when they're really big, they're not still big enough to cover 90% losses. If you're paying the same amount for all those books, where in the venture capital world you could probably pull that off.

[A]

Okay. One of the vibes I've sort of gotten from this. It's just really tough to make money in publishing. So you've been in business forever. How do you make money? Where is the, where's that coming from?

[B]

You, you know, we have a cattle back catalog that helps.

[A]

We, that's higher margins.

[B]

That's higher margins and all. Yep. And we also, we, we, we pick good. You know, we, we pick more winners than losers. We pick, you know, that's the nasty way to say it, but we pick books. We have a good track record at picking books that, that work. Other people might have a different history, I don't know. And the does help, you know. So when you're buying these back catalogs that you talked about earlier, you're buying in a little bit of hedge against risk.

[A]

Is the market for back catalog pretty efficient?

[B]

Well, which market just for back catalog?

[A]

Novels, children's books. I mean it seems like there's only five or six buyers who would buy in terms of the big publishing houses.

[B]

Oh, you mean in terms of acquiring a company.

[A]

Yeah, exactly. Or buying the rights to Roald Dahl or Where the Wild Things Are. Like, do you feel like that's enough efficient market?

[B]

Well, it's just different because the way our publishing deals work in the US Generally is that the publisher has the rights for the term of copyright. It's really long time. So these catalogs are not coming on the market that often.

[A]

And that's 100 years.

[B]

It's life of the author plus. Is it 100 years now? I can't remember.

[A]

Oh, life of the author plus time.

[B]

Yes. Yeah. So when people look to buy something, they're buying companies, and part of the calculation is what is their backlist delivering. And every once in a while, a catalog does come up. There's provisions in the copyright law that allow for a reversion of rights to the author. And then those catalogs come up and people go after them, and we've bought some. Oftentimes they stay with the original publisher for technical reasons that make it easier for that to happen. But you're buying companies, you're not. Those catalogs don't come on the market as, oh, here's somewhat, you know, Maurice, Index, backlist it. You know that that's not something that happens regularly.

[A]

All right, last question. Macmillan. Talk about macmillan, how it's differentiated inside of the industry, the kinds of authors that you're looking for. And then also, if I'm writing fiction, children's books, nonfiction, like, who do I call to get in the door? Like, hey, I got a great book. That's what you're looking for.

[B]

Well, you got to get that agent. Remember, you got to get that agent to get in this book.

[A]

Yeah. So tell me about that. So tell me about macmillan. And then I guess I got to get the agent. Right?

[B]

Right. Yeah. So a couple things about macmillan, I think what's really neat, we have eight publishing divisions, including our audio division, so seven divisions that are publishing new books day to day. Our audio division actually does do some audio originals as well. And what's really neat, and I think the competitive advantage for us is the personalities of all those imprints are very, very different. So we might get two or three or sometimes even four or five of our companies competing for the same book, but the book will look really different depending on who gets it. And in fact, once the books get to a certain level, they got to come to me for approval for the advance.

[A]

So that's like half a million or more.

[B]

I'm not telling you what the number is, but it's a number. So once they come to me, they'll send me an email. Here's our pitch, John. This is why we think we want this many dollars for the book. Sometimes I get the email and I'm like, I thought this is the same book as the other one, but it sounds so different. And I'll read through the emails and it is the same book, but the pitch is so different. And I think that's a competitive advantage because I think that some of our competitors are a little bit more homogeneous in how they approach their publishing. So with us, you have multiple stops that you can go to get a different point of view and a different take on your book. And the other thing that's real interesting is they value the books very differently. So publisher A for me might think, oh, I want 300,000 for this book. And someone else might say they want $500,000. Now, I don't go back and tell each other what they're doing, but if someone asked me for 200 and someone else asked me five, I'll tell the person that asked for two, you're probably not going to get it at two. And they know that means that someone else is asking me for way more money. And they always, it's never not happened. I don't care. That's what I think it's worth. And I know that doesn't happen in other places. So our people have the strength of their convictions, they have a vision for the book. And I think that that gives us a really great competitive advantage. So you have different personalities. So when you come to Macmillan or you have your agent come to Macmillan, they have different places to have different takes on the book, and it gives you multiple chances to get in our door. So when I think about Macmillan and what separates us also, I talk about this with the company at large. At almost every company meeting, I say, when people hear Macmillan, I want them to think, macmillan, that's the place to be. And what does that mean? It means that if we're the place to be, our authors like us, and they want to bring all their books to us, and their agents want to bring all their books to us, it means the retailers think that we're good partners and they want to go out of their way to make our books work. It means that the vendors that we work with, the printers, they'll go out of their way for us. If we need that quick reprint, they'll go out of their way to work with us to make that happen. It means our employees like working for us, and everyone else wishes they could work for us. And now when I'm going out to the London Book Fair in two weeks, or when I'm in Frankfurt past October, people come up to me and they say, john, I'm here in macmillan's the place to be. That's what separates us. And the last thing is, I talk about this all the time and again in company meetings. I want people to have joy in their day. It's important we spend more time at work than we do doing anything else. And if you have joy in your day, it makes the mundane less mundane. It makes the hard days less hard and makes the good days that much better. And a quick story again about my grandfather. I'd go to see him play all the time. I'd go to clubs and he'd come off the bandstand and sometimes he'd say. He'd say, you see that drummer, John? I said, yeah, Pop, I saw the drummer. He goes, you see him looking at his watch? So I saw him looking at his watch. He goes, if you've got to look at your watch and you're playing music, you need another job. And if we could approximate some of that kind of love that my grandfather had for music into our day to day, we're going to win. Yeah.

[A]

That was really cool. Thank you.

[B]

Thank you. Yeah.