Could Kickstarter Help To Replace The Book Publishers?

14 January 2013

I’m fascinated by the Kickstarter site. Indeed, I’m fascinated by the whole crowdfunding idea and movement. I’ve long argued that there’s a gap in the business funding market, a gap that badly needs to be filled. We’re seeing the beginnings of filling it in UK sites like CrowdCube. The JOBS Act in the US will aid some of the Kickstarter like sites in moving into that area of business, rather than creative project funding. I should note at this point that Kickstarter themselves have already said they’re not going to do so.

The problem, the gap in the market, is that it’s almost impossible to find equity funding in small amounts. The $30,000 to $250,000 sort of amount. It’s simply not worth professional fund raisers (or professional money managers) trying to look at this sort of scale because the compliance and research costs are so high compared to any possible returns on money invested. Until very recently it has also been impossible (in the US at least) to appeal to the crowd for small sums that in aggregate can indeed provide that sort of equity. For you’ve got to file all sorts of paperwork with the SEC and the like to be able to do so. The costs of doing that being greater than the sum that it is hoped will be raised. It’s here that the JOBS Act will help.

However, my particular area of interest at the moment is book publishing. Amazon, iTunes, the whole digital revolution, has meant that the book publishers themselves no longer have a monopoly over the physical process of producing a book. It’s no longer necessary (nor even perhaps desirable) to produce a physical book and even when you do want to do so print on demand means you don’t have to produce thousands at a time. Distribution can be done through Amazon or Apple‘s iTunes (and there are many others, Smashwords for example).

Other parts of the publishing industry are becoming disaggregated as well. There are plenty of freelance editors, layout artists, proof and copy readers and so on. It’s entirely possible to do almost all of the book production process these days without reference to a traditional publisher at all. Except for one thing: money.

It is still sadly true that the writing of a book takes considerable time. Further, with non-fiction, so does the research necessary take time. And, as we all know, time is money. It’s here that the traditional publishing industry still controls matters. For they are the only people able to commit the $20,000 to $100,000 that an author needs to be able to devote the several months to couple of years necessary to actually research and write a book.

My apologies if this comes as news to some. But books really aren’t written at full speed, as fast as someone can type. Novels don’t get knocked off in a week: it is entirely possible to type 10,000 words a day but that does not mean that 7 day’s typing gets you a full length novel.

Thus authors either need to write in the interstices of other work or alternatively they need an advance so that they can cry off the other stuff and just concentrate.

It is this last part of traditional publishing’s control over the book production process that Kickstarter might be able to break. By being able to ask some hundreds to thousands to pre-commit to purchasing a copy (well, it has to be a reward for a contribution but it’s effectively the same) that advance can be created through crowdfunding.

In fact, I’m so interested in whether this process can work that I’ve a Kickstarter of my own on the site. How To Create A Liberal America is now just under one third funded with two weeks left to go. The essential concept is that we can see that some high tax, high redistribution societies do work. The Nordics for example, indeed, they’re often held up as the very image of the desirable liberal society. Yet there are other (Spain say, or Greece) societies which are just as high tax, just as redistributive, which really do not work in anything like the same manner or to the same extent. So, what is it that makes one set of places work, others not?

In short, what is it over and above just taxing and spending more that would be necessary to produce that desirably liberal society?

The requirement for funding is very simply that it would take some four months of work to research and write such a book. And mortgages need to be paid, animals fed, lights kept burning while that is done.

It’s possible to view this as simply an experiment: but I do actually want to write the book. For there are a rather large number of misconceptions about how those Nordics societies really work. Misconceptions that I think should be corrected before someone charges ahead and recreates Greece rather than Denmark.

Whether it will in fact work or not I don’t know, that’s why it’s called an experiment. I’ll be able to let you know whether it has worked in a couple of weeks. That it might not is shown by this example. The book on how to run a crowdfunding campaign that failed to get crowdfunded.