Personal libraries are living, breathing clusters of books old and new. Like fingerprints, libraries are unique to individuals. They can be small or sprawling. They contain books that span time - ancient volumes of Shakespeare pressed face-to-face against Rory Sutherland’s eye-popping Alchemy. Individual book collections reflect the souls and minds of their owners. I believe books will always be a fixture in homes, regardless of how entirely the digital world engulfs us.
In contrast to last month’s newsletter on continuing education (where I suggested educators would be eager to leave traditional employment if equipped with a platform to create independently), I do not think authors will be quick to disintermediate from publishers. Education and publishing are both in need of innovation to more effectively serve their constituents; in book publishing, this innovation will come from an intentional focus on the author’s resonance with and value to the audience. It will be enabled by a publishing platform that allows authors to break the rules.
Stripe is a SaaS (software as a service) company that develops products to help businesses accept and make payments online. In 2018, it formed Stripe Press, a small-scale publishing house. Why would a payments company offer a publishing platform? This part of Stripe’s business is in direct competition with the “big five” of publishing: Penguin Random House (PRH), HarperCollins Publishers, Simon & Schuster, Hachette Book Group and Macmillan Publishers. These five companies “are responsible… for around 80 percent of the books published in the United States each year,” according to the Wall Street Journal.
Within the legacy publishing industry, Stripe’s young publishing press is refreshing - it is Sutherland’s electric cover art on a dusty, tired bookshelf. An Authoritative Look at Book Publishing Startups in the United States by Thad McIlroy states, “Book publishing has never been a technology-adept industry; indeed it is historically technology-averse. This is a challenge for the (minority of) startups targeting existing publishing companies.” Stripe Press is different because it was born from a technology company. It is a strategic asset because it allows Stripe to shape and share influential knowledge with its interconnected ecosystem of entrepreneurs, businesses, authors, and technologists.
From Stripe Press’ webpage:
Stripe Press publishes books about economic and technological advancement.
Stripe partners with millions of the world’s most innovative businesses—organizations that will shape the world of tomorrow. These businesses are the result of many different inputs. Perhaps the most important ingredient is “ideas.” Stripe Press highlights ideas that we think can be broadly useful.
Like other independent publishers, Stripe has identified a niche and clear position around advancing authors in a certain part of the market; the quality of the authors it works with speak volumes. Stripe Press is refined in its taste, and offers unique services to its growing, tech-savvy community of writers.
In 2018 when Stripe Press debuted, Axios wrote, the bottom line: “This is the latest example of how tech companies use content marketing to build their brands and connect with customers (and would-be customers) beyond the products they sell… Stripe’s mission is to grow the GDP of the internet… by sharing previously hard-to-acquire knowledge and expertise about starting and running companies.”
I believe Stripe is on to something here. The company is focused on more than just marketing. In the same way Apple built its brand around design, Stripe is building a brand that advocates for intellectual curiosity and for technology. Stripe’s brand as applied to publishing brings a freshness to a legacy industry, and prizes the unique perspectives and personalities of authors.
The average author’s margins are being squeezed. This New York Times article summarizes a survey by Authors Guild, and states, “the median pay for full-time writers was $20,300 in 2017, and that number decreased to $6,080 when part-time writers were considered.” Growth has been relatively flat in the publishing industry for the past few decades. Since the debuts of the Kindle and the iPhone in 2007, innovation in physical book publishing seems to have stalled, and has shifted toward new takes on formats for digital books.
Typically, the payment structure in book publishing works as follows:
Writers are given advances, or sums of money for delivering an acceptable manuscript. Advances are not free money; they represent a portion of the royalties for an author’s book that the author receives ahead of time. Authors do not earn royalties for a book until it has sold enough copies to cover the advance. Once authors pay back their advances, they are able to begin earning royalties. A common royalty rate is 10% of the book's cover price. For example, if a book retails for $10, then the author earns $1.00 per book. Keep in mind, different versions of the books and various sales channels equate to different royalties.
In his aforementioned report, McIlroy states:
An average of 90 companies a year have started up during the 10 years since the launch of the Amazon Kindle in 2007. That’s a lot of human capital directed at the reinvention of publishing. The total funds raised by all 889 startups is only $925 million, not even a billion. And a large chunk of that cash has gone to a handful of companies – Wattpad @ $67 million, Scribd @ $48 million… only 15% of the 890 companies have received any funding (some as little as $10k, $30k, or $42k). Nearly a third of the companies on my list (31.1%) are no longer in business.
On the other hand, I would rather celebrate this treasure-trove of human ingenuity. The large publishers are not setting much of an example to the industry on how to innovate, so we must look to invent the future of publishing.
Though many publishing startups have and will fail, Stripe is well-oriented in this market. It marries strong financial standing, like that of the “big five” with an independent publisher’s meticulous focus on the author and author journey.
Stripe Press is helping shift innovation back into book publishing. The authors it works with are positive on their experiences with Stripe, and perhaps better-compensated than other authors. Readers think the books are distinctly beautiful, transformative sources of happiness that contain information on unique topics. Stripe Press is more than marketing. It is a way for Stripe to recognize a constituency it finds valuable, in addition to its efforts with entrepreneurs and businesses. Authors are its third key area of focus. Stripe shifts the incentive structure in their favor, and gives all three of these groups the tools to get off the ground.
Businesses: Stripe’s core payments infrastructure, Increment (magazine about how teams build and operate software systems at scale)
Authors: Stripe Press (Stripe’s publishing branch)
Through these efforts, Stripe goes beyond surface-level marketing. It has identified creative ways to add value to its community through resource guides and tailored content. Stripe charges 2.9% + 30 cents per successful card charge. Stripe wants its customers to thrive. It grows when its customers grow. Educating customers in non-traditional ways is Stripe’s competitive advantage. The more transactions run through Stripe’s platform, the better. As it builds its ecosystem of entrepreneur, business, author, and tech-first tools, Stripe’s rising tide will lift all boats.
Further Reading on the World of Publishing:
Thad McIlroy: The Future of Publishing Report - if interested in this topic, you should download the PDF.
Patrick Collison’s (Stripe Co-Founder) bookshelf
Speaking of the next wave of publishing - the World After Capital (by Albert Wenger, a Managing Partner at Union Square Ventures) is the first book I have read entirely online. It was a great book; he used GitBook to write it.
Thanks to Spencer DeShon for providing feedback on this newsletter.