How Power Works in the Writing Industry
A market analysis, Divinations-style
Two weeks ago I published my framework for doing market analysis, fusing the ideas of strategy legends Michael Porter, Clayton Christensen, and Hamilton Helmer. By far the most common request was to see a detailed example of how it works in practice. So today I have for you my analysis of the writing industry!
I picked this market because I’ve been working in the industry since 2015 (first with my startup Hardbound, then at Substack, and now Every) and at this point I know it fairly well. But I’m still learning every day, and in fact the process of doing this very analysis taught me a ton.
We’ll go through the following steps to figure out which businesses have sustainable market power in the writing industry, and why:
- Define the market. You can go as broad or narrow as you want, but what’s most important is that you nail down A) the job-to-be-done / use case, and B) the general product category that serves that use case.
- Identify the basis of competition. Why do consumers choose one product over another? What attributes are most important? Which are good enough, where no further improvement is felt? And which dimensions of product quality are felt to be lacking and in need of improvement?
- Map the value chain. What is the chain of activities that needs to be performed for raw resources to get translated into finished products? What companies are involved, and which activities do they control?
- Locate the position of power. Which activities in the value chain shape the end-user’s experience the most? These are the key activities that relate to the basis of competition. Which companies perform these activities? Who does it best?
- Trace the source of that power. Using Hamilton Helmer’s 7 Powers as our list of options (scale economies, network economies, counter-positioning, switching costs, branding, cornered resource, and process power) we’ll see which one has the biggest impact on the user experience, and therefore is the source of their power.
(If you want to learn more about this framework, read this.)
Ok, let’s get into it!
1. Defining “the writing industry”
For the purposes of this analysis, “the writing industry” is the group of businesses and people that perform the activities necessary to create articles and books.
Conventionally, most people would look at many of the fields I’m grouping together as separate, like the “newspaper industry” or the “book publishing industry” or the “magazine industry” or even the nascent “paid email newsletter industry.” But I am intentionally grouping them all together because it is my observation that most writers are willing to fluidly shift between formats depending on what is most lucrative, prestigious, and creatively interesting. And I think readers in most cases ultimately care most about the brain who created the words they love to spend time with, and care less whether they are seeing those words in print, on a kindle, or on their phone screen.
Of course there is no such thing as “the writing industry”—it’s a term I pretty much made up. But the redpill buddhist perspective is that all industry labels are ultimately just labels, but the labels and lines on the map are not the territory, and they can be useful or not depending on what you’re trying to do.
But I’m getting ahead of myself a bit. To get a truly useful industry definition, we need to nail down two things: the job-to-be-done we want to focus on, and the general product category. In this case the product category is simple: articles and books. But the job to be done is pretty complex.
Why do people read? What’s the job-to-be-done of writing? What problem does writing solve?
It’s an impossibly broad question, like asking what problem steel solves. You could say things like “steel’s job is to be a strong material with a bit of flexibility” or “writing’s job is to allow one person to receive stories, ideas, and information from another person in a way that is durable over time, easily compressed, scalably distributed, self-paced, and only requires one sense at a time (usually vision, sometimes hearing).”
This is an interesting rabbit-hole to go down, but it’s still way too broad. So let’s ask a slightly more narrow question: why do people read books and articles?
- To learn what is happening in parts of the world they care about
- To learn the history of things they care about
- To learn how a thing works, or how to do a thing
- To be entertained and absorbed in a story
- To wind down at the end of a long day
- Because a teacher made them
- Because a friend said it was good
- Because the cover at the bookstore caught their eye
- Because their friend (or enemy!) is mentioned in the article
- Because it reinforces a part of their identity they value
- Because the post went viral and they wanted to see what the fuss was about
Can we simplify this list any? I see two primary desires:
Every written work has to have at least a little bit of both, in my opinion. And I’d actually go further and say that information and entertainment are two sides of the same coin. It is sort of weird to say, but I think when you feel entertained it’s the effect of certain arrangements of information.
As Marshall McLuhan said: “Anyone who tries to make a distinction between education and entertainment doesn't know the first thing about either.”
The reason comedy and romance novels and thrillers make us feel good (entertained) is because they arrange information in ways that activate certain centers of primal importance. Like, I think we like thrillers for the same reason we so often dream about scary or violent scenarios: they prepare us to survive in similar situations. And I think given the evolutionary importance of reproduction it should be obvious why romance and sex are so central to all forms of entertainment. Similarly, the best textbooks and academic papers feel incredibly entertaining to the right people, like they are unlocking the secrets of the universe.
Of course, doing this in a way that actually works and doesn’t feel cliché or dull is an incredibly difficult task. Great writing is rare. Which leads us to a very important problem inherent in the writing industry that the whole industry is structured around solving.
2. The basis of competition
The vast majority of writing you encounter is not going to contain any information or entertainment value that matters to you at all, but a lot of writing you encounter seems on the outside like it could be interesting.