As many of you know, the industry went through another big upheaval last week so we decided to spend some time talking to Bob Miller, President and Publisher of an innovative new imprint of HarperCollins called HarperStudio. To get more information on their publishing model or read their blog: The 26th Story, http://harperstudio.typepad.com/blog/aboutus.html.

1) Given what happened on “Black Wednesday” in publishing, did these layoffs come as a surprise to you?

The layoffs we saw last week were catalyzed by the current economic slowdown, but unfortunately they’ve been in the making for several years. Trade publishers have been paying more and more exorbitant advances for new material that they hope will become bestsellers that in turn will make up for their previous overpayments. It’s a vicious cycle, and they are having to cut costs to compensate for it.

2) To the outsider or to a publishing novice we’d often point to the high advances many of these authors get, but is that really the problem or is it more complicated than that? Isn’t this really about an industry built on the outdated idea of consignment?

Consignment - or returns - is the other “big sucking sound” at the loss end of the trade publishing p + l besides unearned advances. We currently have an industry-wide average returns percentage of forty percent on new hardcovers, which is an unacceptable basis on which to run any business.

3) What do you think is necessary to fix the industry or is it fixable? Do you think a new model of publishing is warranted? And could publishing exist without returns?

I think that the business is fixable, and I’m interested in experimenting with new approaches. I’d like to see if we can find authors willing to be paid reasonable advances in exchange for having an equal share of the profits. I’d like to see if we can find booksellers willing to risk owning inventory in exchange for having a larger margin from publishers. I’d like to see if we can reduce marketing costs by moving our marketing online. And I’d like to see if we can reach readers more efficiently with downloaded e-book and audiobook formats, perhaps in combination with traditional editions.

4) Why do you think the HarperStudio model makes sense?

The four experiments I’ve listed in answer to Question #3 above are the ones we’re pursuing with HarperStudio. It’s too early to see results yet, though I’m encouraged by the forty-plus authors who have chosen to publish with our new company so far.

5) Do you think more houses will start adopting this model?

I think that other houses are already trying various aspects of this model, and that we’ll see more experimentation along these lines in the very near future. However, in addition to these experiments, the larger houses will need to continue paying large advances for large distribution/marketing titles when those titles are established brand-names. Those brand-names still make up an enormous percentage of the revenues at the largest publishing houses.

6) During the upheaval in the industry what do you think the survival prospects are for the big houses?

I think that we’ll continue to see consolidation in our industry as companies are combined in an attempt to find higher margins by reducing costs.

7) Do you think publishers are sometimes out of touch with what the buying public wants? The Gargoyle as an example. This book is emblematic of the big mistakes some publishers make, going all out for books that don’t have mass appeal and setting up themselves and the author for failure.

The Gargoyle was a problem for its publisher because of the high level of risk in the advance, distribution and marketing for an unestablished author. So-called “make fiction” is one of the riskiest bets a publisher can take. However, the rewards for building a new brand-name are high, which explains why publishers would make these bets. The Gargoyle might not have paid off, but Little Brown’s similar bet on The Historian certainly did. It’s a lot easier to criticize these choices than to make them, and while I’m not publishing commercial fiction, I admire the people who do it well..

8) Despite all of this bad news, companies like Hachette are still thriving. Why is that? Is their model different or did the Stephenie Meyer book save them from the fallout that happened this week?

Hachette is thriving thanks to an unusually high percentage of smart editorial choices. They are managing to not only make big bets in new fiction pay off, they are building their brand-name novelists, and furthermore, they are often successful with new non-fiction such as Dewey, or personalities such as Jon Stewart and Stephen Colbert. If I wore a hat, I’d take it off to them.

9) In the midst of all of this, is there a bright spot on the horizon for publishing?

I see a lot of reasons for hope. I think that people will continue to turn to books for entertainment and inspiration in the years ahead. We need to use all of the tools available, from free samples to blogging to social networking to print-on-demand, etc…, to connect those people with the best authors in the most efficient and powerful ways we can find.

(Originally published at the Author Marketing Experts, Inc. blog and reprinted with permission from the author, Penny Sansevieri).