When publishing outsiders are suggesting cures for what ails the business, one very common suggestion is that publishers ditch their New York real estate and head for the sticks. Why do they need to pay Manhattan rent?
Why indeed?
Well, first this ignores that there are actually quite a few publishers outside of New York. You have Sourcebooks in Chicago, Chronicle in San Francisco, and many many more.
And there’s a historical explanation as well: New York has been an important center of the American publishing world since the early 1800s.
But setting that aside, why are the Big Six all still in New York? Why don’t they hightail it to South Dakota?
The same reason Apple and Google are in Silicon Valley, Wall Street is on Wall Street, and Hollywood is in Hollywood: Industries tend to cluster in certain areas and derive more benefit from drawing upon a talent pool and networking than they lose in increased rent.
You can actually observe this on an individual store level (think: the Diamond District in New York). Shops cluster together and derive benefits from the increased traffic. But that’s retail.
Urban studies theorist Richard Florida has written about the power of industry density. He writes:
Density makes it easier for people and firms to interact and connect with one another, and it reduces the effort, friction, and energy that’s used to make these connections. Density increases the speed at which new ideas are conceived and diffused across the economy, accelerating the speed with which new enterprises and new industries are created.
In New York, publishers can draw upon being close to the other major media outlets, they can draw upon a highly educated and creative workforce, are more likely to attract executive talent, draw upon the cachet of being one of the New York publishers, and network with writers themselves, many of whom live in New York.
And to a certain extent publishers have already moved to Scranton: one of the jokes on The Office was that they were trying to win HarperCollins’ business. Well, Scranton really is where HarperCollins’ accounting department is located. What’s in New York? Editorial, art, marketing, sales, executives.
It’s easy to just say, oh, well, all those people can up and move, or you can find people with those qualifications elsewhere. But moving carries its own costs, and the people working at publishers are highly skilled. It would be extremely difficult to migrate those operations elsewhere on a major scale.
All that said: Things do change!
Los Angeles and New York used to be the center of the music industry, but no longer. Now Nashville is growing in clout. Detroit used to be the undisputed center of the auto industry, but now plants are increasingly opening in the Deep South.
Could publishing be forced from NYC? Random House recently saved “millions” of dollars by downsizing its footprint, and these days millions isn’t anything to sneeze at, but we’re talking about a company with revenue in the billions. “Millions” is not exactly the difference between wild profitability and turning out the lights.
And then there’s this: Publishers are able to draw upon a tremendous wealth of publishing talent in New York, and if there’s one thing publishers need to weather this massive transformation: it’s talent.
What do you think? Is it NYC or bust for publishers?
%20Publishers%20Are%20Still%20In%20New%20York){kind=link}
A very interesting and thought provoking post.
I live in the NYC area; I work in Manhattan. In fact, I work across the street from Simon & Schuster and down the street from MacMillan.
But I have yet to see any great personal benefit to living and working in the heart of the U.S. publishing industry (other than my "day job," which is journalism).
I have friends who have published with online-based publishers. I do not believe, with today's technology, publishers need either to be based or even clustered around famed haunts for "doing lunch" in Manhattan. I could theoretically be published by Espasa in Madrid as easily–thanks to the internet–as by Scribner's in Manhattan, or Wylie & Sons in Cincinatti. Or by McSweeney's out your way.
Many of the "better" agents were based in Manhattan at one time, for the very reasons you mentioned. And, because of the sense that pressure makes diamonds and competition makes sharper talent, many writers still live and work here.
But they don't have to. They choose to. Just as many celebrities choose to buy Manhattan apartments and price out those trying to make a living in "the City," so, too, do many not.
I have one friend, a reasonably famous and successful writer, who still mostly lives in Wisconsin. One who lives in Oregon. One in Baltimore. One where he's always lived, in Whitmore Lake, Michigan.
And at least one (really several, because I lived there for years as well) in Texas.
And there's you, in sunny California (where "Redroom.com," a writer's online community, is based).
It always has amused me that Joseph Pulitzer was really mostly known for the St. Louis Post-Dispatch, yet Columbia University, in NYC, is in charge of the Pulitzer Prizes.
And William Randolph Hearst is mostly known for San Simeon, out your way, than for the New York World (which no longer exists).
New York is reasonably unique as a melting pot of humanity, a particularly ambitious nd hardworking, creative and intelligent and, presumably largely well-educated sampling of humanity. It's true.
But locations attract people and industry, I think, more than the industries–in this day and age–necessarily attract people. That's exactly why, while New York still has Broadway, Los Angeles has Hollywood (even some television series', most notably All My Children, that were filmed in NY have moved to California).
So, real estate prices being what they are, I would not be at all surprised to find, say, a start-up upstart publishing house operated virtually out of someone's basement, garage or apartment, that one day will be the place people want to be associated with.
Publishing–I'm not, you'll note, talking literature here–is a business. A business based on economics. And if an "economy of scale" cannot be reached remaining in Manhattan, I expect it will move. Look at Amazon, for instance…or Google…you may not be. But they are.
Nathan @8:03 AM said:
"But really, all of this kind of strikes me as kind of missing the forest from the trees. The marginal cost of renting Manhattan office space vs. Illinois office space is what, a couple million dollars? Ten million dollars? For a company that measures its revenue in the billions and profit in the hundreds of millions that ten million dollars is a relative drop in the bucket."
Huzzah!! Oh my word, in so many discussions about the state of the economy that includes recommendations about how people need to cut back, it always seems to me that the forest is being completely ignored. It’s like saying, Well, we want the rich to remain unbelievably rich, so everyone else needs to cut back to help them out. I’m not against people being rich. But Bertelsmann AG owns Random House, and last year Bertelsmann AG INCREASED its sales to $21.7 BILLION. So, considering that they increased their sales to $21.7 billion…which, with all the digits looks like this: $21,700,000,000.00…it really doesn’t make sense to say that Bertelsmann AG should take away the New York office space of the people toiling away in publishing in order to save $1 million or even $10 million. Plus, when entire industries actually do leave a city, the city usually ends up decimated – not a great thing for the people living there.
Good post, good discussion!
I hear what some people are saying about high rent and low profit margins, but I agree that when you start talking in terms of billions, saving a few million (and it would just be a few, not even a few hundred) really isn't much. I mean, would you move across town just to save $5 a day on transit fare? Or on gas? It doesn't make sense.
Also: I know a writer who sent 300 queries before she got a yes. But once she had that one yes, she had a contact, who she remembered. And then she met that same contact at a meeting later, and at the meetings she met more contacts, whom she remembered, and from then on all her book deals were basically brokered face-to-face. She developed relationships with people in publishing by going to conferences and workshops and meetings for writers and she knows what people want and she gets a lot of work. You cannot underestimate the power of face-to-face networking.
So some folks are clamoring about how large the sales are for publishing companies. But these same publishing companies with huge sales are struggling to turn a profit. That's right, even with a billion dollars in sales, some of these companies still run red from time to time.
https://www.publishersweekly.com/pw/by-topic/industry-news/financial-reporting/article/46591-scholastic-reports-higher-third-quarter-loss.html
And if you look at financial statements, the biggest expenses are usually salaries and facilities.
Because the major publishers are located in one of the most expensive to live in cities, then I'd also expect publishers to have high than average salaries, even though some of the staff can afford to work for free, and even though some of the staff will spend over an hour riding the train in from a cheaper, nearby city like NJ.
What this means is that these publishers have to charge more for eBooks like Nathan pointed out in an earlier blog post to make money.
Of course, these same publishers heavily depend on their authors. Check this out:
https://www.publishersweekly.com/pw/by-topic/industry-news/financial-reporting/article/46428-profits-fall-at-hachette.html
The new publishers are located in every little hamlet. All it takes for an author to be successful is writing talent, a computer (with MS Word), and partnerships with a good editor and cover designer. Even critique groups can be found online.
Virtual partnering changes everything, and lowers overhead significantly. How can NY compete with the business that runs out of a garage in Nebraska?
Look at all the indies in the top 100 bestsellers on Kindle store. They have extremely low overhead and high profit margins. How does the NY high-buck lunch crowd compete with that?
They can't. Publishing will operate on a more distributed model. Some NY publishers will survive, but their business model will look very different from what it is today.
Anon @8:58 PM,
I’m not sure how you’re interpreting the financial figures in the articles you mentioned. Also, I’m not sure, but I don’t think that Scholastic’s one of the "Big Six" publishing houses. Here are the "Big Six" with information on the bigger corporations that own them: here.
The Publishers Weekly article said that profits fell from the previous year for the Hachette Book Group USA parent company Lagardere because the previous year they had "unprecedented sales" for the mega-best-seller Stephenie Meyer’s books. So, of course, sales later on wouldn’t be as high as during the unprecedented mega-best-selling period. Even then, their sales "dropped down" to 2.16 BILLION euros.
In regard to Scholastic, they still earned $1.37 BILLION revenue for a 9-month period, and expect to earn $1.9 BILLION revenue for the year: here.
Anon @8:58 PM,
I’m not sure how you’re interpreting the financial figures in the articles you mentioned. Also, I’m not sure, but I don’t think that Scholastic’s one of the “Big Six” publishing houses. Here are the “Big Six” with information on the bigger corporations that own them: here.
The Publishers Weekly article said that profits fell from the previous year for the Hachette Book Group USA parent company Lagardere because the previous year they had “unprecedented sales” for the mega-best-seller Stephenie Meyer’s books. So, of course, sales later on wouldn’t be as high as during the unprecedented mega-best-selling period. Even then, their sales “dropped down” to 2.16 billion euros.
In regard to Scholastic, they still earned $1.37 BILLION revenue for a 9-month period, and expect to earn $1.9 BILLION revenue for the year: here.
Great post, Nathan, as always! It seems to boil down to the advantages of face-to-face networking vs. networking on the Internet. A little like the digital vs. the paper book controversy.
Since this is a "globalizing" age, with more and more information flying in the ether, it is likely that there will be a "spreading out" effect. Some publishers will move out of NYC, or at least move out some of their operations (the "worker-bees" of administration etc. Others will stay for the benefit of "density", "stimulation" from face-to-face interaction.
Conclusion? NYC will always remain a major publishing center, but others will rise – indeed, they have already risen in California and elsewhere!
I've never really thought about this issue because to me all publishers being in New York just always seemed to make sense. As an Art History Major I always just think of great industries clustering together and thriving (Publishing in NYC, Films in Hollywood etc.) as functionning on the same sort of logic/system that made Florence the Cradle of the Renaissance. It's incredibly difficult to pinpoint how most of these things start and is usually a weird serendipidous mix of the money, the talent and the demand being in the same place at the same time (We are the Medicis, we have power and palaces and churches. We need Artists to Decorate them. You! Giotto, come work for us). But once it has started its so easy for these things to build up and maintain themselves (Leonardo, Michelangelo, Raphael, and other artists who were sometimes but not always Ninja Turtles). This is not to say the industry can't spread and prosper elsewhere (Titian in Venice…) and sure it doesn't last forever (Give it a few centuries and Paris became the capitol of the Art world and then…well New York), but while it does it's just…natural.
Staying in NYC seems the lazy way out. But I admit I'm biased. I'm a 52 year old woman who drove to Manhattan last April from rural far west Texas (from Alpine, next to Marfa) to be part of Seth Godin's 1st leadership session, "Linchpin: Are You Indispensable?" I am the mother of two, and my husband's business partner, so of course I'm a linchpin!! I felt like every cabbie I passed in NYC had the same idea "Let's scare the crap out of the little lady with the Texas tags!" It worked, too!
https://jdavisstudio.com/2011/03/seth-godin-poke-the-box-linchpin-and-hows-that-for-seo-seth/
Interesting post, Nathan, thank you, and I learned a lot from the various perspectives of the commenters. I do understand the theory of clustering (Banks all wind up on the same street and sometimes the same street corner of town, for example). However, the Internet has changed and will continue to change daily the way we work across the business spectrum, including where we live and work. The inability thus far of NYC publishing to recognize this and to react well to it in a real-time manner can be seen in every publisher's bottom line and every author's royalty statement. If they want to remain relevant in this world, they'd better hop to it, and that means re-examining some of their most cherished precepts. Like advances for Snooki, and Fifth Avenue rentals.
Publishers are mostly in New York because that's where they first set up shop. The first firms were little more than copyright pirates crouching on trade routes waiting for hijacked products to come in from "literary agents" operating abroad.
New York was the closest port of call from European locales and coasting packet ships and centrally situated for postal roads between New England and North Atlantic colonies.
The book presses of the time were mostly in Connecticut, one or two situated here and there elsewhere. Connecticut predominated in that noble pasttime until further mass production advances came to the industry early 20th century.
In order to protect the major capital investments involved, the industry as a whole lobbied for rigorous copyright enforcement. Copyright laws until that time were largely given lip service, including in the Constitution.
I talked to a publishing house editor who recently moved to the Midwest from New York. He said he flies to New York and has power lunches with agents just as often as he did when he was in New York ("When I lived in New York, I could go a year without seeing someone," he said.) So maybe that will be a trend – agencies and publishing houses stay in New York but agents and editors telecommute.
At one time, New York was the center of everything in America. It used to be the major cargo port-of-entry; now Los Angeles and Long Beach have that distinction. It used to be the center of the movie industry until the moviemakers discovered Los Angeles was cheaper, had better weather and was 3000 miles away from Thomas Edison's goons. It used to have a stranglehold on advertising, which has now freed itself from Madison Avenue. NYC was the first U.S. capitol after independence. It was the main destination for immigrants (now Los Angeles).
All this goes to show that New York has no permanent claim on the publishing industry or, for that matter, any other industry.
We've all seen billion-dollar companies cut back on trivial expenses to make their quarterly numbers look good. (I worked for one that stopped buying office supplies for a year.) NYC rents and salaries are hardly trivial expenses. And while major corporations don't seem to give a damn how much they pay their executives, they grind every dime possible out of their lower-level supervisors and workers, both in salaries and amenities.
In a way, I'm astonished the publishing industry didn't start migrating out of NYC as soon as it was devoured by huge multinationals; the largest companies seem to also be the biggest tightwads.
The high-tech industry is scattered all over the country — Silicon Valley, yes, but also Seattle, Portland, Austin, Boston, San Diego, and Raleigh-Durham. Big Pharma is the same way. Seattle thought Boeing could never move, but it did and seems to be doing okay. As others have pointed out here, there are film professionals making good livings in Vancouver, Toronto, Dallas, and various other places without ever having to go to Hollywood.
As some other posters have suggested, I wouldn't be at all surprised to see the vast majority of publishing-related workers hied out to the other 99% of the country (or outsourced to other English-speaking countries) while the executives keep their vestigial headquarters in NYC. It's happened with most other industries — publishing ultimately can't be that different.
Big Publishing may eventually migrate out of NYC, but consider what changes would be necessary to make it happen quickly:
I. Convince your staff that they want to pack up and live somewhere else. (And let's assume the company is willing to pay for their relocation.)
a. How many of them have spouses/lifepartners who cannot so easily relocate? Odds are very good that the partner is the bigger breadwinner.
b. Or children in school? (If you're putting kids through college, the CUNY local-resident tuition can't be beat.)
II. So a nontrivial percentage of your staff do not want to relocate. Do you:
a. Hire a bunch of unknowns in the new location, who will have to be trained, or
b. Continue to work with your old staff via Skype and other internet options?
II.b. is not as easy as you might think. More issues get resolved in any large office–not just publishing–by someone riding an elevator to see a colleague face-to-face in their office.
III. Publishing-specific, there are some things you just can't do over the internet:
a. Route hard proofs quickly (essential for anything done in color, which would apply to any book that has a cover)
b. Get a quick second or third opinion from colleagues
c. Process a whole lot of something efficiently at a big meeting (e.g. budget an entire month's list, have five cover conferences, etc.)
The reality is that while many jobs in publishing can be done remotely, it is more efficient and easier to do these things with everyone in the same building. I don't think a day has gone by in my 16 years in the biz where I don't get out of my office to bring something to a colleague for discussion. Sure, I could call or email, but it's just plain faster to do in person, and if there's one thing you don't have excess of in publishing, it's time.
————
Related to this would be the issue of ongoing staffing. When a senior staff person quits, you want to replace them quickly, with a plug-n-play new hire. You don't want to say, "Is there anyone else here in Omaha who can do this?"; or worse, "Who can we convince to come out here to Omaha?"
No, you will say, "Hey, I know three people over at Harper/Random/Penguin who have been itching to move up. Let's get them in for interviews."
If you want to relocate the portions of the industry that are unique to Publishing, then you have to either dismantle a highly efficient personnel-management arrangement, or you have to recreate the existing situation in a different locale.
I’m an editor living and working in Colorado. I love living here. I love the laid-back vibe and outdoorsy culture. But when it comes to networking opportunities, it’s definitely a little painful. You really have to put yourself out there to meet other people in your field. There are some innovative companies here, but there are also some companies that are completely stagnant. With fewer opportunities to change jobs, it’s not uncommon for some people to stay at the same publishing house for their entire career doing the same thing day in and day out. It’s not easy to move up. I don’t plan on relocating to New York, but I totally and completely understand why so many people do.
It's much easier for small presses now. I'm an editor who lives in New Hampshire. Another lives in California, and a third lives in Massachusetts. We have authors all over the country, and even an intern in Ohio. We all work virtually. It saves a bundle on overhead, and we can all live where and how we like. I go to New York for meetings about a dozen times a year, but that's all I need to do, thanks to the interwebs. 🙂
I've seen a lot of posts pitting NYC against Omaha or North Dakota. But that's really a false choice. There are any number of major metropolitan areas in the U.S. that would be perfectly suitable homes for the headquarters of a publishing firm. This country isn't like that famous New Yorker cover map of the U.S., where everything west of the Hudson is an arid wasteland.
As far as staffing is concerned: most modern firms are perfectly able to hire people who don't live next door, even people with specialized skills. Perhaps *especially* people with specialized skills: two medical device companies have flown a friend of mine from Boston to Southern California for interviews in the past couple of weeks. The more senior the candidate, the more likely the firm will court him/her wherever he/she happens to be. The lower-level employees move themselves if they can.
Would people move with the firm? Well, people do that regularly when their employer ups stakes and moves. Yes, a few of them stay behind. A firm moving from Manhattan to Queens would probably lose a few people in transit, too.
Isn't it possible, though, that some number of employees would welcome the move? Unless you're in the top 10% of wage earners, your quality of life in New York City can be pretty grim. Even as expensive as Los Angeles or San Francisco are, they're cheap compared to NYC. There are world-class museums in Chicago and L.A. and acclaimed theater scenes in Minneapolis and Seattle — and you can afford to enjoy them without a second mortgage.
The Big 3 automakers thought they had to be in Detroit for critical mass. Aerospace thought it had to be in Southern California for critical mass. That's over now. Someday it will be publishing's turn.
NYC for everything publishing breeds a pack mentality, an echo chamber. If you want to see and hear the same people, the same editors, and hire the same talent from the same old snob places, then stay in NYC.
Publishing deserves a diversity of voices, and for that reason alone it should embrace a more distributed model.
I work in Berkeley and there are plenty of networking opportunities. I also don't think the reasons highlighted in the article are particularly striking. Full-color covers are not as limiting as many consumer goods, like say calculators or quilts. We have made cover decisions before based on the digital images the designers sent over. It's not that big a deal.
It is also not that difficult to train new staff. Sure, it takes longer, but you get them cheaper and in this industry there's a line waiting to get in. You can also hire people with editorial experience who've worked outside of publishing: there's still advertising, PR, design–basically any company that produces copy will need editors.
I've been told that NY publishers think they're the whole world and posts like this sadly confirm that stereotype. We have NYC transplants and I always ask them how it is different. Haven't had a meaningful response yet.
The same type of people who are normally writers/artists/or into the humanities in general are the same type of people who appreciate all of the other creative industries and lifestyle that NYC brings… It is not wonder it has stayed in NYC…
Sure, other places you can find work, but would you go "looking" for work there? It's much easier long term for somebody in that career to be in NYC as their job is going to change multiple times most likely and they can just hop from one gig to another. This is the same way IT consultants do in say, Silicon Valley. They also want to be around the best and the brightest. I'd rather live say, in Chicago or Boston myself… but, the industry and connections in NYC in this field and related ones are just too much to reckon with, especially for somebody that nothing is keeping them from staying where they currently are. Just move to NYC like everybody else. I've lived in other major metros, and it is just not the same. A simple look in something like writers market or on job boards or company holdings will quantify any doubt you might have.
Until you become an author who has contacts or can work independently, you still have to pay the bills. Working in a related industry is better for your talent to be writing or editing every day, than it is to say take an insurance job in Chicago or a tech job in Silicon Valley then try to write at night.