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Have Editors Become Bankers?

Just like bankers, publishers need to be wary of making big bets based on shaky financial fundamentals.

By Edward Nawotka

In an interview given in India, editor and founder of the New Press, André Schiffrin, notes that editors at the Frankfurt Book Fair no longer run off to their rooms to read manuscripts at night before buying rights. Instead, he says, “Now, it all works with a two-page outline. A publisher reads two pages and writes a $100,000…It’s about investments. The editor has become a banker.”

Schiffrin laments the change in book culture that has transformed editors from literary tastemakers to bean counters. His message is not new — at least in the United States, where his seminal book on the topic, The Business of Books, was published over a decade ago (in India is has just been published, in a single edition with 2010′s Words and Money by Navayana Press).

To what extent do you believe Schiffrin is right? Are editors making the same type of a bet that a banker is making when handing out a small business loan? Do much the same criteria apply?

Loan officers know that 80% of small businesses fail within the first 18 months of opening, much in the same way (I am going to surmise) that 80% of books don’t earn back their advances. There is a correlation in books and business. Should they stand apart?

Gerald Howard recently wrote in Publishers Weekly about watching the movie Moneyball, which prompted him to observe:

Look, I really respect numbers and am not phobic about them. As a young editor I did hundreds of P&Ls by hand, with a calculator, gaining an invaluable sense of the financial underpinnings of our business. Henry James said the two most beautiful words in the English language are “summer afternoon.” Pace The Master, they are actually “earned out.” Or maybe “royalty check.”

I agree with Howard about the worth of “earned out,” but often it’s the increasingly rare blockbuster deals that make headlines — those promising first novels that are bought for mid to high six figure sums. And headlines, often, translate to editorial status. That status translates into job offers, even if those books never “earn out.”

Of course, Howard also warns people to be wary of taking big bets with shaky fundamentals:

At this moment we are living through an endless recession caused in good part by toxic mortgage bonds devised by Wall Street rocket scientists, so-called, and rated Triple A by the clueless numbers crunchers at the ratings agencies. Both are examples of massive failures of judgment.

Howard’s advice, “Calculate, but verify.”

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