Cherishing the Family Jewels

There are some who believe that the 80:20 rule applies to almost everything. Also known as the Pareto principle or the principle of factor sparsity, it suggests that approximately 20% of activity produces 80% of results. Conversely, in approximate terms we have 80% of population owning only 20% of wealth and other such examples in every sphere of activity, and so it goes on. I am inclined to agree.

As I look at law publishing businesses, particularly the smaller ones which are still engaged in print and book publishing, I’m sure that around 20% of their activity and output produces 80% of the reward and that around 80% of what they do would be better not being done, apart from the fact that, logically, the 80:20 rule would then apply to the remaining 20%. One sees evidence of this in any cursory examination of many portfolios and in the way that backlists are often managed. It is to the extent that there may be, in businesses large and small, as in every sphere, occasionally and distinct from some hugely talented publishing heroes, a degree of amateurism or rather an absence of professionalism and experience in this area. It is often accompanied by unjustifiably high-pricing without adding value as a way desperately to achieve profitably, sometimes further hampered by alleged shady business practices, but in reality creates an ever-downward cycle of failure.

A crude but effective analysis and one that I have undertaken simply by looking at some law publishers’ back catalogues is to calculate the number of their law books which are in, at minimum, second but more meaningfully, third or better editions and how many years have passed since the most recent edition was published. It can be somewhat shocking just how the extents of the portfolios reduce in size when these criteria are applied; for every 100 titles, probably, at best, only 20 were worth publishing and indeed are greatly relied upon. The catalogues tend to be littered with speculative first editions, as often as not languishing therein for three or more years. The inference is that almost all such output reflects interesting but ultimately failed innovative experimentation in which targets and objectives as originally anticipated were not met, that money may have been lost, and decision-making processes, where they actually exist, were probably flawed. It might be argued that the subject matter of such a book in question may not have merited a second and subsequent editions but then one would ask why the decision was made to publish something that has no future or creates no long-term relationships with customers. Ideally, if one is going to be in the book business at all, “must-have” annual editions are optimal.

Realistically, I am sure that it is the intention of every competent law publisher, even aside from some of their corporate level dysfunctionality and evolution from their traditional objectives, when they commission a book, to create a legacy that will endure well beyond their stewardship. Series from the UK such as, for example, The Common Law Library, British Shipping Laws, Tolley Tax, Halsbury’s Laws of England and perhaps a few titles from the combined Bloomsbury Professional and Hart Publishing are testament to the benefits of cherishing the family jewels, though even in some of those cases, gaps between editions can be excessive, sometimes due to scale and complexity and the reliance on external authors.

There are some areas of book publishing in which it is acceptable to claim that it’s all about gambling and laying bets on winning and, by implication, the risk of failure; the Harry Potter franchise is a most successful example of this. Probably, no amount of research could have predicted the scale of the project and its triumph, though undoubtedly quality, experience and commercial skills were critical. One of the lessons that I was taught in legal publishing was that we were not to be moronic gamblers, driven by emotion and a desire to “do something” or what one simply wants to do, despite evidence to the contrary. Rather, our selection of new product was capable of being done based on measurable factors and processes, primarily financial and exploiting the critical characteristics of the law, using knowledge and expertise and based on intense market research to determine need and expectation. Equally important was the focus on maintaining and curating the backlist portfolio, to ensure that success could be capitalised upon as quickly, frequently and, in terms of profitability, as viably as possible. If a title was initially satisfactory, analyse the reasons, understand the strengths and weaknesses, building on the former and eliminating the latter. The result, in theory, is more, better, higher-value and increasingly frequent publications, the idea being that around 80% success would be achieved, with perhaps 20% failure, rather than the percentage opposite. We were encouraged to stop constantly trying to chase only the new and unmeasurable, work less frenetically and considerably more effectively and to put aside the “tear-off contract pad” when attending cocktail parties among potential authors.

One of the many dangerous results of not managing the portfolio and of relying on the never-ending grind of searching for new and untested product is that the core objective of the smaller publisher, namely being sold to a larger one, is massively diminished. How can one put monetary value of any size on future untested ideas, in the form of all the new titles in production or in mind, combined with inventory of aged and ageing initial editions whose ongoing sales potential reduces, logically, with each passing day and which have no potential for new editions? In such a case, all post-acquisition cost goes into to continuing to fund the gambling habit and the results are predictable. Against that, a portfolio of second and subsequent editions indicates customer loyalty and contact, readiness to re-purchase based on evident need for the content, carefully managed quality and, ultimately wise, high-value investment with the likelihood of future financial achievement. It may be that there are aspects of this thought process embedded in the lead up to and conclusion of the recent acquisition by Law Business Research Ltd. of Globe Business Media Group and of course, many others.

Clearly, this topic relates to an ever-diminishing part of the legal information and technology industries, as reducing numbers of providers are in the business of law, tax, accounting, financial and business regulatory book publishing, however valued and sought-after books remain and highly prioritised they are, by some publishers. If one particular commentator is correct (in my judgement, he’s not), there is reason to consider the possibility of Thomson Reuters selling its law and/or tax market-focused businesses, significantly altering the structure of the industry. Some would suggest that the shift has happened already, as the focus of the major players has changed fundamentally. Where this has been the case, in certain cases it is arguably, with negative rather than positive outcomes. Yet I have no doubt that the principle of factor sparsity applies equally in those fields in much the same ways. For those managing and assessing law book portfolios, my suggestion would be that unless the evidence of a favourable result of a first edition is measurable, obvious and based primarily on financial criteria, accept the idea of “failing quickly”. Then, move on and focus on renewing the 20% of success that has more likely been achieved, doing so more frequently and with increasing added-value to raise profitability and help customers to do their jobs. This process is also more likely efficaciously to support the continued progression from print to critical online information provision. In some ways it is much less fun and ego-massaging than thinking up or accepting fascinating new ideas, but it is more likely to pay the rent and sustain career futures.