California’s Goodreads and the New Economic Order

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department

bernick_good readsMichael Larsen is one of the deans of literary agents in the United States, who established Larsen-Pomada Literary Agents in 1972 and has represented hundreds of books since. Last month, at the sold-out San Francisco Writers Conference he acknowledged the mounting challenges facing authors in the past few years—the stagnant book industry sales, the shuttering of bookstores, and the heightened competition with more than one million books published each year. But his main message on writing was upbeat: “There is no better time than today to be a writer.”

Chief among his arguments: the eroding power of the big media gatekeepers and the rise of social media platforms that enable authors to connect directly with readers. Authors no longer are dependent on currying the favor of a small group of large publishing houses and major national newspapers and journals. There is a transformation going on in publishing, as in other sectors, that is decentralizing economic power for the better.

As Larsen notes, nowhere is this transformation more clearly demonstrated than in the rise of Goodreads, the largest of the social media platforms. Goodreads was founded in California, and has its headquarters here. Its growth is an important economic story today, not only for writers and aspiring writers, but also for the broader economy in California and beyond.

In the ancient past of book publishing, roughly before 2000, if an author was fortunate enough to find a publisher for her book, she had very few avenues for publicity. The main gatekeeper roles were played by a small number of book reviewers for the large daily newspapers–New York Times, Washington Post, Los Angeles Times—and weekly magazines (Time, Newsweek) . An author might try a book tour of various cities, but this often was costly, beyond the budgets of most writers, and usually reached a small number of actual book purchasers.

As the internet grew in the early 2000s, several websites set out to encourage readers to share book recommendations and to allow writers to reach out to potential audiences. These sites remained small, unable to gain traction, with only limited understanding of how the internet might connect people in different locations. Then in early 2007, Goodreads was launched.

Goodreads was the creation of two young Stanford graduates, Otis Chandler–whose family in the twentieth century had built the once-provincial Los Angeles Times into a national newspaper—and his wife, Elizabeth Khuri-Chandler. As Chandler has recounted in interviews over the years, when he started Goodreads, he brought both his training at Stanford as an engineer, and a passion for books.

Chandler had worked in the early 2000s with several social media start-ups, including an online dating site. He understood the then-emerging social networks in a way that other book websites and book bloggers did not. Goodreads was not an immediate success: it started with a few hundred members, friends and friends of friends. But it gradually was profiled by a few of the tech publications and by book bloggers, and its growth accelerated rapidly.

“Our mission is to help readers find and share books they love,” says Suzanne Skyvara, Goodreads Vice President of Communications. “Book discovery is the core problem we’re trying to solve.” Goodreads is now solving that problem in huge numbers. According to Skyvara, as of early 2017 Goodreads has over 60 million accounts globally, with the largest number in the United States. Over 30,000 book reviews are posted each day, and 17 million books added by Goodreads members to their Want to Read shelves each month.

Goodreads has elements of other social networking sites. Members post books that they have read, books that they are currently reading, and books that they want to read. Members “follow” and “friend” each other, and are notified of new postings. Members come together to form book clubs tailored to book genres(and sub-genres): Goodreads now hosts over 20,000 book clubs.

For readers, Goodreads brings the advantages common throughout social media of building communities, reducing isolation, and connecting people who would otherwise never meet. The readers of 1950s mystery novels set in Los Angeles can connect no matter where they live, as can the enthusiasts of seventeenth century romances, and of books with Star Wars themes.

Readers are finding their individual voices heard through the posted recommendations and reviews. Publishers and authors are shifting resources to social media as they see the power of individual recommendations from thousands, even millions of readers.

As good as this democratization is for readers, it is even better for writers. Now getting the word out about a book becomes far less dependent than in the past on knowing the book reviewer at the Washington Post or New York Times, or being in the inner circle of New Yorker editor David Remnick, or having to conform to the views of what is publishable held by Remnick or the other big machers in publishing.

Through Goodreads, writers have platforms and tools to appeal to readers directly. Goodreads enables writers to speak directly to thousands of readers or more, to test and target marketing strategies, to respond to and develop followings of readers.

In his talks and writing, Larsen notes that Goodreads and other social media not only are benefiting individual writers by providing the platforms for direct outreach, but also writers collectively by increasing the universe of readers and book buyers. One of Larsen’s authors, a novelist who is also an instructor of a novel-writing class at UC Berkeley Extension, starts each class of aspiring novelists with the explanation: “The universe of book sales is not constant or capped. It can be expanded. You’re not competing against each other. You’re competing against other forms of entertainment and recreation; you all benefit from helping each other.” The writer/reader interaction on Goodreads increases the universe of all books sold.

Goodreads’ main impact is in altering the economic organization of publishing. But its growth holds lessons beyond publishing. Within a half-mile radius of the Goodreads headquarters in San Francisco are thousands of entrepreneurs trying similarly to re-order other sectors: health care, education, business services.

In each of these sectors, the forms of economic re-organization will differ. What Goodreads has to teach other entrepreneurs are not the specific forms as much as the values that should drive these forms: the strengthened producer-consumer connection, the consumer as producer (the readers are themselves reviewers-writers on Goodreads), an emphasis on craft, and a breakdown of economic hierarchies.

These are not new values. But sections of our economy may have lost sight of them. California ntrepreneurs like the Chandlers are helping to reclaim these values.

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