Winner takes all versus the Matthew effect

Winner takes all

There’s a vague notion going around. For some it’s a suspicion, for others it has become a certainty, the rest of us worry and hope it’s wrong.

It’s the idea that the internet exaggerates the sales inequality of media markets. That, by massively enabling word of mouth and social networking, the web means that we will only get mega-bestsellers or flops, with little to nothing in between. The market becomes just bestsellers leaving the long tail with scraps.

In theory, this should be a simple question to answer. Somebody with access to detailed numbers from the market could calculate the Gini coefficient for book sales revenue over the years. If it used to be lower and is now almost one (or higher, since it’s theoretically possible for books to have negative revenue through returns) then we probably have a winner takes all situation on our hands.

If, however the Gini coefficient has remained the same or stays broadly equal to society’s income Gini coefficient, then we probably just have a regular “the world isn’t fair, boohoo” situation and there’s no need to blame the internet.

My suspicion is that the book market is only about as unequal as the economy in general, that the sales difference between J.K. Rowling’s books and the rest is about the same as the wealth difference between the top 1% and the plebeian masses (us).

But, something has changed!

Everything changes, all the time. In uncontrolled circumstances you can’t reliably map specific changes and claim that one causes the other. A lot of the time when we do that we get it the wrong way around (if we’re lucky), and end up claiming that wet pavements cause rain.

There is a related concept that might explain some of the sales patterns we’re seeing but, again, it’s hard to come up with conclusive proof given that big data lets us see what we want in the numbers and a market doesn’t lend itself to double blind experiments.

It is something that has been observed in plenty of other systems.

The Matthew effect

The idea is very simple: the rich get richer and the easiest way to get more popular is to be popular in the first place.

How it would work in a market could be described like this: every sale of a copy of a book increases the probability of selling other copies independently of other variables in the market.

If you couple it with Reeds Law which states that “the utility of large networks, particularly social networks, can scale exponentially with the size of the network” then you get this:

If a book has sold twice the number of copies of another book, it will have four (22) times the sales clout of the lesser selling title. A book that has sold ten times more will have a hundred times the sales clout. And so on.

What does this mean for publishing?

If this theory is even remotely true this has several major consequences:

  • Minor and random variations early on in a title’s sales history can snowball it into a bestseller. There won’t be any logical rhyme or reason for this and predicting these successes will be impossible because they are completely stochastic.
  • Hopping onto known successes (i.e. pushing an already big snowball further down the hill) will have much bigger payoffs than building up sales from scratch. Why go with the lottery ticket probabilities of a new author or completely new title when you can earn so much more by turning a one million dollar bestseller into a ten million dollar blockbuster?
  • Since the big payoffs are governed by randomness and the moderate payoffs by hard work, publishers have an incentive to cut down on the hard work (editorial, acquisition, design) and focus exclusively on the logistics of printing and shipping shit-tons of Fifty Shades of Grey (or whatever the next big thing is).
  • Self-publishers and small publishers become responsible for the research, development, and discovery of new successful titles. And once a title is a proven thing, a big publisher will swoop in and buy it up, promising the author more money than they’d get doing it alone or with a small publisher.
  • The big losers are small to medium-sized publishers who do all of the R&D but don’t have the resources to scale sales up into the stratosphere when they hit a success.
  • The winners are self-publishers and self-pub coops who can build sales up the slow and hard way for as long as it takes and keep a lion’s share of the upside in the unlikely event that they do find a major success. The bargaining position of an already successful author has never been this strong in the history of publishing.

Or, of course, it could all just be wild speculation based on a wild theory with no basis in reality. Time will tell.

One thought on “Winner takes all versus the Matthew effect

  1. In the good old analog days of bookselling the scientific algorithm was “Stack ’em high and watch ’em fly” which translated to – the more copies of a book you stacked in the window or stacked on the table the more it would sell. Implied popularity led to increased sales which led to actual popularity which further increased sales. Of course this also led to large returns. Social networks have become the virtual large stacks of books.

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