F. Scott Fitzgerald’s The Great Gatsby, published in 1925 by the distinguished New York imprint Charles Scribner’s Sons, ends with a reflection on Gatsby’s doomed attempt to recover the love of his youth. “So we beat on, boats against the current, drawn back ceaselessly into the past.”

Taylor Swift is also anguished about her past: “it pains me very deeply to remain separated from the music I spent over a decade creating”, the singer warned Shamrock Capital, the fund that has bought the masters of her first six albums for $300m. She hopes to recapture it by recording the songs again.

That deal and news that publishers are lining up to buy Simon & Schuster, the parent company of Scribner, from ViacomCBS for $1.7bn reflect starkly on publishing and music’s obsession with new hits. The reliability of Simon & Schuster’s backlist and Swift’s songs is what makes them so valuable.

Editors in publishing houses and executives at music labels spend their careers trying to sign debut authors and new bands. But they may now be focused on the wrong thing, given that the value of familiar songs and books is growing as investors are drawn back increasingly into the past.

The two activities — launching new acts and exploiting rights to the ones on the books — used to fit together well at publishers and recorded music labels. The “artists and repertoire” executives who toured clubs in search of the next Rolling Stones or Taylor Swift lived more lavishly than book editors, but their task was similar.

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The balance is threatened in music because streaming makes the back catalogue more potent. Swift is not the only star to wish she had not signed away so many rights when she was younger and a chance of fame came knocking: Kanye West wants his own masters back and has denounced music labels as “modern day slave ships”.

As live performance — which has become a big slice of musicians’ income — is halted by the pandemic, stars have looked more closely at what their recordings are worth. They have realised that being paid a small amount per stream on Spotify, rather than a larger one-off fee for an album sale, favours evergreens over passing hits.

The effect grows as more middle-aged people subscribe to streaming services: if you want to be reintroduced to Joni Mitchell’s 1974 album Court and Spark, as I did this week, it is simple. Nostalgia is reinforced by being at home more: streams of the top 200 songs on Spotify fell in spring amid lockdown, while catalogue listening rose.

Technology, meanwhile, makes it easier to invest in known assets rather than making a bet on untested acts. Hipgnosis Songs Fund, an investment vehicle listed on the London Stock Exchange, says it made an average of £4,868 per song in 2019, compared with less than £150 at major labels; it helps to know what you are buying.

The same thing is occurring in publishing, albeit in a more stately manner. Simon & Schuster publishes 2,500 books a year but a growing proportion of publishers’ sales come from what they already own, rather than the debut authors to whom they pay advances in the hope of a bestseller.

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Sales of print backlist books rose to 63 per cent of a total £1.7bn in the UK consumer market last year, according to The Bookseller, with £611m of that from books published before 2017. A third of sales of books by Lee Child, author of the Jack Reacher series of thrillers, were “deep backlist” — equivalent to Swift’s masters.

Not every title can last: celebrity memoirs do well on bestseller lists, but fade away. Books for children have the greatest staying power, with JK Rowling’s Harry Potter series the outstanding example. The Tiger Who Came to Tea by the late Judith Kerr, first published in 1968, sold 115,000 copies last year.

Technology also boosts the backlist. Book shops can only stock a fraction of available works, and publishers used to let many titles go out of print, making it hard to buy them. But they can now sit in ebook stores indefinitely, or be ordered online with little effort.

As with music, when publishers eliminate the marketing costs and risks of launching new writers, and simply sell their established ones, it is more profitable — sales margins on backlists can be twice as high. Simon & Schuster has 1,400 employees, including many editors, but would be worth far less without its accumulated history.

The question that some investors are starting to pose is why labels and book publishers persist in pouring money into unknowns when their catalogues are more rewarding? This sounds absurd to anyone who has been brought up in these businesses — who will find the future Fitzgeralds and Swifts if they do not look? — but it will get louder.

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If it ceases to be worth hunting for talent, the way the hit machine for music and books has always operated will not endure much longer. Newcomers will have to build their brands themselves on social media rather than being snapped up early by an imprint or music label. It may be more profitable for investors and superstars, but it will not work for everyone.

john.gapper@ft.com


Via Financial Times