Did agent John Brockman push his software too hard?
By Frank Rose, October 1985
Even John Brockman was amazed at the response. For ten years he'd been a moderately successful literary agent with a reputation for selling oddball California scientists—Fritjof Capra, John Lilly, Gregory Bateson, Gary Zukav—to staid New York publishing houses. Then he got the idea that these same houses ought to be publishing software for the personal computers that were turning up in offices and living rooms around the country—software that he, John Brockman, could provide. And so, on his stationery, right next to the little drawing of an open book, he added a little drawing of a floppy disk. No matter that almost no one in publishing knew what a floppy disk was; he would explain it to them.
The initial reaction was one of utter incomprehension. One company chairman thought Brockman was trying to sell him something for his secretaries to use; when he realized it was something his company could sell, something new and different and potentially profitable, he went up to the computer and touched its screen the way E.T. touched the refrigerator. This was not an inappropriate response, for what Brockman was offering was more than just a new product: It was a foothold in a whole new industry, an industry that was still in its infancy and was already about to hit $2 billion in sales.
Book publishing, by contrast, was worth only about $8 billion in all its various forms-hardcover, softcover, mass market, religious books, textbooks, and so forth-and seemed mature almost to the point of senility.
"Electronic publishing," which was what this new industry was called, thus offered a very attractive hedge against the declining unit sales and eroding profit margins of the book business. Publishing companies could continue to provide copyrighted literature in the traditional form—books—but they could also provide it in the exciting new form of computer software. Bookstores could put this new literature right alongside the old kind and sell it to a rapidly expanding public of computer owners, who seemed ready to pay any price imaginable in their eagerness to find new uses for the machines they'd bought. Companies could enter this new market and establish themselves now, or they could risk being left behind. And if they decided to get in, all they had to do was call. . . .
Brockman's first big sale came in April 1983, when Simon & Schuster bought the distribution rights to Wordvision, a word-processing program for the IBM PC that would sell in bookstores for $49.95. But it was the books he started offering that publishers really went wild about- books for the personal computer owner, who had already demonstrated an astonishing eagerness to buy mumbo-jumbo titles from obscure techie publishing companies like Sybex and TAB. Most general trade publishers weren't doing computer books then, and those that were—a handful of nonfiction houses like McGraw-Hill and Prentice-Hall—were offering advances In the $5,000 range. But that spring, Brockman concluded three deals that showed trade publishers were ready to enter the market in a major new way. Harper & Row paid $600,000 for a six-book series from InfoWorld a weekly tabloid that many regarded as the Women's Wear Daily of the personal computer industry. Simon & Schuster bought a ten-book series from PC World, an Inch-thick magazine devoted solely to the IBM PC, for a reported $600,000 And Doubleday bought the rights to Stewart Brand's latest venture. The Whole Earth Software Catalog, for $1.3 million— figure that was touted at the time -as the highest ever paid for a trade paperback book.
Even today, Brockman professes to be at a loss to explain how it happened. It was IBM coming into the market. It was Time magazine naming the computer its "machine of the year." It was his own ability as a salesman. It was tulipomania and the madness of crowds. All he knows is that for months, any computer writer who walked into his office was going to walk away with a deal and a lot of them walked into his office. "There was a flood," he recalled, "and it was just a question of who we would represent, and how many hours there were in the day to make deals."
But the problem with creating a market, which is what Brockman did with electronic publishing, is what to do when the market runs away with you. Brockman ran with it until it hit a wall. "John's mistake," said Philip Pochoda, who bought The Whole Earth Software Catalog for Doubleday, "is that he had so many books that he saturated the market. But he was in a quandary, because were he to say, 'I can't take it on,' somebody else would agent them. And he does have a way of representing books that makes publishers think they're much bigger than anybody had previously. entertained."
"Those were heady days, said Warner Software president Albert Litewka, who left Macmillan to set up Warner Communications' electronic publishing operation at the end of 1982. "It seemed as though the field were exploding. People were desperate to get in. All these people were looking for a connection and product- and there he was with a connection and a product."
Now, of course, the frenzy is over. With the collapse of the home computer market the question is, what arc publishers going to do with all these computer books? And the answer is not pretty. At Harper & Row, the electronic publishing division that was set up with such fanfare two years ago was closed down list fall. and its director, Jane Isay—the woman who bought the InfoWorld series-has left. Six months later, Doubleday fired Pochoda, the director of its Quantum line. No heads have rolled at S&S, but the parent company, Gulf + Western, has bought Prentice-Hall and its subsidiary, Brady Computer Books, and merged them with Simon & Schuster's general reference group. The dozen or so players that jumped into electronic publishing when the market was hot have already been reduced by a third, and not all the survivors are in great shape. And as for Brockman-well, neither Brockman nor anybody else has been selling many computer books lately.
Clearly, electronic publishing has not turned out to be the savior of the industry. But in the wake of the debacle a number of questions remain. Will publishing companies ever have any success with software? Was Brockman right to charge what the market would bear, even if the market was on a suicide binge? And was he a prophet before his time, as many still insist, or merely a hustler, out for a fast buck at the expense of the computer illiterates on Publishers' Row?
Brockman has no regrets: "My job is to represent clients, not to worry about publishers. It's the publishers' job to represent the company to the best of their ability. When those two forces meet, it's called a market. Basically you create a market and the market decides. And nobody should feel bad about doing a good deal."
And as for the industry, poorer but wiser is the attitude there. "John didn't hold a gun to anybody's head," one editor pointed out. "He made good use of the ignorance and greed of publishers," said another. "He knew he didn't have to understand computers to make money in the publishing business. He just went to people who were more ignorant than he was. That's his genius."
Indeed, one of the more curious things about Brockman's operation has been his professed ignorance of computers. He's made a point of seeming uninformed, as if to demonstrate that you don't have to be a teenage engineer to computer-arcane offshoots of mathematics such as cybernetics and information theory—and this gives him an edge most people in publishing lack.
"People talk about computers—computers are dumb machines," he declared one afternoon as he sat in his aggressively high-tech office on upper Broadway, two floors above Charivari. "It's the theories that allowed them to happen, and these are the things that change the way we interact. Most people, especially in publishing, are totally illiterate about the developments of the past 30 or 40 years they think it ended with Freud and Marx, and they think The NewYorker is the bible of knowledge. But that's all right. In a way it suits my purposes."
Downstairs, in the second-floor reception area, a highly decorative young woman was ensconced behind a fortresslike desk with a shower of multicolored plastic squiggles on the wall behind her plastic sperm cells, apparently, enlarged a thousand times or so. "Information" said the large letters on the wall behind her. "Power" said the letters on the wall opposite.
Lunch was spread out on Brockman's desk: deli sandwiches and coffee. Lunch at Brockman's has become one of the instant rituals of electronic publishing. Other agents lunch—usually on some editor's expense account-at the Four Seasons or the Russian Tea Room or Joanna. Brockman lunches at his desk, and if you're his lunch date, you do too. There is no menu. Katinka Matson, his partner (in business as in life), orders up, and what you see is what you get. Information. Power.
"I'm serious," Brockman was saying. "New York represents mass culture, and as we move more and more into what McLuhan called the global culture, everything interconnected and synchronistic, what happens is-if you want to get on the Johnny Carson show, you have to appeal to 35 million Americans. I don't know anyone that would be of interest to 35 million Americans. The people I want to hang out with are a little offbeat. They're going to appeal to a million people, maybe. So I find that the only way in America to get new ideas is books."
Brockman's client list is full of people with new ideas: Stewart Brand, the man behind The Whole Earth Catalog. Fritjof Capra, the Berkeley physicist who explored the link between quantum physics. Hubert Dreyfus, the existentialist philosopher who's made a career out of arguing that computers will never be as smart as we are. Edward Feigenbaum, the Stanford artificial intelligence expert who, with coauthor Pamela McCorduck, sounded the alarm on the Japanese in The Fifth Generation. John Lilly, the acid-popping dolphin researcher whose life was the basis for the movie Altered States. Amory Lovins, the alternative-energy guru. Adam Osborne, the California computer entrepreneur. How would you describe all this? Visionary nonfiction? Brockman brightened, then looked dubious. "It sounds good," he said, "but I think it's limiting. I'm interested in the universe, and anything less than everything is nothing to me. I want it all, and I'm so in love with the universe that I pretend human emotion."
Pretend human emotion?
Brockman smiled. Joke.
A brusque individual with steel gray hair and a penchant for the kind of Italian suits that might be worn by fashion-conscious gangsters, Brockman seems an unlikely representative for California's New Age intellectuals. In fact, however, it was they who got him into the business. It was a crowd he fell in with during the sixties, when, just out of Columbia Business School, he managed the FilmMakers' Cinematheque on Lafayette Street and created an "intermedia kinetic environment"—film, music, lights, artists—for the New York Film Festival. Later he produced USCO, a psychedelic art troupe whose swirling sounds and throbbing lights sought to alter people's sense of space and time. (It was here that he met Stewart Brand, an ex paratrooper who I lived in an Airstream trailer and sold posters saving "Why Haven't We Seen the Whole Earth Yet?") After USCO he became a business consultant, creating switched-on environments for corporate clients like the Scott Paper Co., which claimed an 11 percent sales jump in its Confidence sanitary napkins line after exposing its sales force to Brockman's strobes.
Brockman's escapades in the sixties were McLuhanesque ventures in media, and like most things that came out of McLuhan they had their root in a psychedelic reading of cybernetic theory. Then in 1973 he came out with a book called Afterwords, a work of "avant-garde epistemology" consisting of some 300 cryptic messages, each on a separate page, which telegraphed the nature of the new cybernetic world view. "Man Is dead," read the first page. "Nobody knows," read the last, "and you can't find out."
Afterwords was followed a year later by a bizarre appreciation entitled After Brockman, which bore praise from thinkers ranging from Lilly to critic Richard Kostelanetz to Ira Einhorn, the Philadelphia guru who went on the lam after his girlfriend was found decomposing in a trunk. The masterwork itself enjoyed only a few weeks of publication by Doubleday before it was remaindered—an experience that seems to have permanently affected Brockman's feelings about publishers.
Brockman's agenting career began at a conference a year or two later. He was at Esalen when Lilly and Gregory Bateson suggested that, as a business school graduate who lived in New York and had dealt with publishers, he ought to agent their books. So he returned from Big Sur with a two page proposal from Lilly and dropped it off at S&S. Two hours later he had an offer for $55,000. This has been the hallmark of his operation ever since: terse proposals, good money, fast work. "No wasted motion" is how one editor put it after sharing a cab with him and getting three proposals to read on the way.
Brockman's original hope was that agenting would be the sideline that could support his career as a writer. It didn't work out that way, but between deals he has managed to complete another book, to be published by Viking in February called Einstein, Gertrude Stein, Wittgenstein and Frankenstein. "The title's cute," he admitted, "but it's not really a joke because it's a way of organizing my own mental set, in that the words of the world are the life of the world and that nature's not Created, it's said." Brockman does like to speak in code: To understand him, it helps to have read his books. What this comment means is that language is the 1. what we call reality only reality we know, is a mental construct, a fiction. Einstein et al. is a look at the new reality that's been relativity theory and cybernetics. (The fourth thinker in the sequence is actually Norbert Weiner, the MIT mathematician who founded cybernetics, but Weiner doesn't rhyme so he went with Frankenstein instead.)
If Brockman's early career was focused on exploiting the link between cybernetics and psychedelia, his later career has been built around selling cybernetics to publishers. What connects the two is his apparent view of himself, not as a literary agent or as a software agent but as a catalytic agent. "I see business as theater," he said. "I produce events and I produce my career and I produce this company. It's not inconsistent with being responsible and doing a first-rate job for the people you represent, but it's another way of looking at things.
"There's an interesting story in the works of the Austrian writer Hugo von Hofmannsthal," he went on. "An imaginary letter from Francis Bacon to Sir John Chandos in which two young men are talking to each other and one says, 'Whenever I think of myself I see myself watching myself thinking, and then I see myself watching that self thinking watching- that self thinking, and so on until I get a terrible headache.' And the other one says, 'Why don't you just shut up and let's get on with what we're doing.' I vacillate between the two. If you play philosophy all day. . . ."
Surely this must give him an advantage over the poor slobs who exist only on the business plane.
"Would that it were so," he replied wearily. "Running a business can definitely give you a serious reality problem."
Brockman's career as a software agent began in April 1982, when he decided to buy a computer for his office, purchased six books on the subject, and got hopelessly confused. To straighten him out, one his West Coast clients put him in touch with James Edlin, a San Francisco computer freak who was a cofounder of PC magazine. Edlin had already toyed with the idea of agenting software himself but gave it up after his would-be partner, a Berkeley literary agent, went off to India to meditate. When he met Brockman he was working on a word- processing program for the IBM PC and thinking of selling it through bookstores. During the course of a deli lunch, Brockman convinced him that there were plenty of big New York publishers that would pay nicely for such a product.
It took him forever to find one, by finally, in April 1983, S&S signed a deal with Edlin's company, Bruce & James buying distribution rights to a whole line of low-cost software for $150,000. It was not a fortuitous arrangement. Bruce, James was months late delivering Wordvision, its first program, and by the time it appeared the $150,000 the company had budgeted for advertising and promotion had long since been spent. Sales were poor, and when S&S, citing massive returns from stores, withheld its first payment, Bruce & James was forced to close its offices, disconnect its phones, and lay off its six employees. The distribution agreement was later terminated amid a blizzard of lawsuits from Edlin's partner, an Ohio real estate man named Bruce McLoughlin, who named not just S&S but the top officers of S&S, Bruce & James (for not suing S&S), and John Brockman (for arranging things with S&S in the first place).
Things went better with Brockman's next product, a teach-vourself-typing program called Typing Tutor 111. Brockman invited publishers to his office to meet its developer, a Montana born sikh who calls himself Sat Tara Khalsa. Frank E. Schwartz, then the president of S&S electronic publishing, became an instant believer.
"There was this guy dressed in white with a white turban and flowing red hair and a red beard," he recalled, "and I said, 'I hope this program is terrific, because this guy is going on television.' " S&S promised a $250,000 advance against royalties and started booking Khalsa on talk shows, on the theory that celebrity programmers could sell software as effectively as celebrity authors sell books. And instead of sealing the program disk in the customary shrink wrapped box, S&S put it in a spiral-bound book that customers could browse through. Something must have worked, for Typing Tutor III has been at the top of the Softsel best-seller list since last fall; Khalsa, meanwhile, has had to buy himself a $100,000 Rolls-Royce as a tax write-off.
But it was with computer books, not software, that the deals became stratospheric. The retail market for computer books had just exploded: In 1982 sales at the giant B. Dalton chain shot up 150 percent over the year before; sales at Ingram, the leading wholesaler, went from $184, 000 to $1.8 million. Brockman argued that some five million Americans already owned a personal computer, that five times that many would own one by 1986, and that each owner could be expected to buy eight to ten books to find out what to do with it. Some publishers decided it was only a fad; others reacted with more enthusiasm than he thought possible. They wanted to get in before it was too late. They wanted to pay big money to demonstrate the strength of their commitment. One editor described it as "a mine-is-bigger-than-yours kind of market." Brockman described it as "a stampede."
Brockman's first offering was a ten-book package for IBM PC owners from PC World, the magazine that Edlin's i former partner, David Bunnell, had I founded after Ziff-Davis bought PC. Seven publishers took part in the auction; Simon & Schuster won it with a bid reported at $600,000. But this was contingent on a number of conditions, most notably a promise by PC World to buy a large number of books to distribute through computer stores. When the magazine was unable to follow through on this, the contract was renegotiated. According to Schwartz, who now heads the reorganized general-reference group at S&S—a huge division that includes electronic publishing, part of Prentice-Hall, Brady Computer Books, and others—it was "basically a risk-free deal."
Other publishers were not so careful. Later that spring, when Brockman was about to auction off a six-book series of product reviews from InfoWorld, Harper & Row made a preemptive offer of $600,000. Harper & Row's Jane Isay saw it as "the insider's book," but with sales averaging 20,000 apiece it has proven to be something else altogether: "Absolute disasters" is how one Harper executive put it. And when Doubleday came up with $1.3 million the same month for four editions of The Whole Earth Software Catalog, many people in publishing were as astonished by the terms of the deal as by the size of it.
The idea for the Whole Earth book had been born the month before, when Brockman, in San Francisco for the annual West Coast Computer Faire, had hosted a gathering of book and software authors at a North Beach bar. A couple of nights later, over dinner in Brand's tugboat in Sausalito, the idea came up again. Brand and Art Kleiner, then the editor of CoEvolution Quarterly, were both enthusiastic, and Brockman, who'd closed the PC World deal just before leaving for the Faire, thought it would be a major book. So early in the morning a few days later, Brand sent a 12-page proposal by electronic mail to Brockman's Broadway office. Katinka Matson quickly edited it and zapped it back to Sausalito, where Brand approved the changes on the spot. Brockman wrote a terse cover letter and had it delivered to eight New York publishing houses the same day. In the letter he asked not only for an unusually high royalty rate and a veto over the cover but he even wanted to deny the publisher the fight, normally regarded as inviolable, to reject the final book as unacceptable for publication. "I was outraged," said an editor at one house. "But Doubleday. . ."
It was about ten days later—a week before the proposal was to be auctioned—that Philip Pochoda phoned with a preemptive offer of $1.25 million. Brockman consulted with Brand and told Pochoda to come back with more. Two hours later, Pochoda phoned again: This time he was offering $1.3 million, and Brockman had 12 hours to respond. Brockman phoned Brand. Brand, in what Brockman now describes as "the worst moment that any literary agent has ever had," said he would have to throw the I Ching and get back to him. (Brand remembers things a little differently. Throw the I Ching? "No," he declared. "That's a hysterical story. It sounds like some East Coast snob imagining how we do things.") When he called back, the answer was yes.
Pochoda maintains that he wasn't concerned about Brockman's terms, given Brand's reputation for professionalism. Sales are everyone's concern now: Despite good reviews, they're reportedly the 100,000-copy range, with the stuck in the 100,000-copy range, with the break-even point at 210, 000—a figure that Doubleday hopes could be reached at the end of the second edition. But 210,000 seems low for a book that retails for $17.50 and was bought for $1.3 million; with net revenues totaling not quite $1.84 million (assuming a 50 percent discount for bookstores), that leaves just $540, 000 to cover overhead, advertising, I publicity, and printing costs.
Brockman, meanwhile, says he was I only doing his job. "In any negotiation, it's a question of muscle," he explained. "And you're only as strong as the proposal you're representing. With that proposal I thought I had the best proposal that any agent will have in this decade. I said to Stewart, 'There are certain things I've always dreamt of as an agent. I'd like to redress all of the wrongs that have been done to me, especially as an author, and that have been done to friends of mine and to you and to other people. I just want to go down and address every term of substance and go for the max. There'll be ten publishers involved, and we'll see who wants the book badly enough, and what they're willing to do.' "
BY THIS TIME—APRIL 1983—the demand for computer books was so great that Brockman was sending out two or three proposals per week and routinely making deals in the $40,000 range. Over the next three months he made deal after deal after deal; publishers were snapping up books, 5, 10, 15 at a time. PC Magic, a 5-book package for E.P. Dutton. A 15-book series for the New American Library from the Waite Group, a California packager. A 10-book series for Harcourt Brace Jovanovich called Einstein's Guide to Personal Computers. "Jeff Einstein," Brockman explained. "No relation. Similar kind of entry-level book.
"One interesting thing about this market," he went on, "is that all these major
publishers decided to jump in and each one felt they needed the basic book. That's what's hurting the industry right now. How many introductions to the Apple IIc can you have on the shelf?"
Didn't Brockman perceive this as a problem when he was selling them?
"I perceived it as a problem, but my responsibility is to the people I work for
You hire me to represent you, you do a new book, you don't want me saying to Simon & Schuster, 'This is a wonderful book, but I know times are rough in publishing so instead of asking for 30 I'll ask for 20 and a lower royalty to help out.' You want your agent getting every last penny your agent can get."
"John did what a good agent should do," said Schwartz of S&S. "He saw the situation and he exploited it."
It was hardly the first time an agent has exploited a market. In the late seventies, mass-market paperback houses went on a spending spree for blockbuster novels just as unit sales were beginning to turn downwards. ■
First published by Manhattan, Inc., October 1985.