Friday, December 05, 2008

The End Predicted

Richard Curtis (E-Reads) has penned an interesting status report on the downward spiral of publishing:
Most of the resentment or suspicion that authors and agents feel toward publishers stems from royalty accounting based on returns. Authors, outraged that creative bookkeeping permits publishers to hold excessive royalties in the name of reserves against returns, consider the system fraudulent. Their viewpoint is easy to understand when you remember that returns are a manipulable form of currency. The temptation to manipulate them intensifies in recessionary or inflationary times when publishers seize upon royalty reserves as the most obvious source of cash to relieve their liquidity problems or earn some extra interest. Publishers cannot with impunity stop paying their printers, their landlords, their paper suppliers, or their employees. But by a stroke of the pen, raising the holdback on royalties from, say, 50 percent to 75 percent, a publisher can liberate enough cash to meet the urgent demands of all those other creditors - at the expense of authors. How, then, could authors, suffering liquidity problems of their own, not feel bitter? Nor is their mood improved to see their remaindered books, on which they receive little or no royalties, selling briskly in used-book stores.

Are there solutions to this dilemma? There are, but they all call for radical changes in the way we think about books, sell them, and account to each other for them. For any plan to succeed, it must: (1) allow publishers to print only as many copies as are necessary to fill orders, (2) put distribution on a nonreturnable basis, (3) enable publishers to make a profit, (4) encourage bookshops and chain stores to make money remaindering books on their own premises, and (5) provide authors with honest, easy-to-understand accounting. That's a tall order. Some gratifying attempts have been essayed, but they all failed because they were not radical enough, nor were they adopted on an industry-wide basis.
There is a great kick at the end.


Michael Herrmann said...

As an independent bookseller, I would be happy to accept all books on a non-returnable basis. I would just ask for a few concessions in return:

1) Take discounts from 43-48% up to 65-70%, so that I can break even when I have to remainder too many of publishers' dumb ideas.

2) Reduce the number of titles published by 50% across the board, so I don't have to take too many chances on every potentially dumb idea for a book that comes down the pike.

3) Eliminate co-op, so that soft money doesn't give chains the kind of advantage they were supposed to lose after the Penguin lawsuit.

In other words, if ego, greed, and stupidity can somehow be eliminated from the current system, a new non-returnable system becomes possible.

I am not holding my breath./mh

Michael Herrmann said...

By the way, are there any published figures on what percentage of books returns to publishers? I would be interested to know. The article you are quoting includes at the end what I believe to be an erroneous assumption about how Amazon conducts its business. I don't understand how they would be different from any other distributor--they have to guess how much to order just like the rest of us--and I bet their returns percentage is about the same as Ingram's.

MC said...

You drive a hard bargain.

Don't the good ideas - Memory keepers Daughter, The Secret, Kite Flyer, Brief Wondrous Life OW, and numerous others mean you should settle for somewhere between 48% and 70%. You seem to be ignoring the good with all the bad.

Reducing titles is something they try periodically. It's not really the number published of course it's not knowing what your audience(s) wants. Just reducing the amount by 50% doesn't help, rather it only reduces the opportunity for 'unanticipated' hits and probably compounds the bad decisions that continue.

Re co-op, money does slosh around and undoubtedly not equally. What about the excessive discounts given to CostClub isn't that a bigger issue for smaller stores?

Ego, greed, you are really asking too much..

On the other comment re-Amazon returns I tend to agree with you. The comment in Richard's post did make me wonder whether Amazon returned less than everyone else. One advantage they do have is that they have a very small number of places for inventory to reside. This is not the case for B&N where inventory is spread across 100s of locations. And in all of those locations any one book will sell differently. That coupled with Amazon's ability to forecast demand aggressively may enable them tighten their inventory so that they don't carry as much. If those suppositions are correct then that might mean as a percentage of their revenues they return less stock. Speculation on my part. I anticipate you will tell me you only have one location but still return 50% of some categories; the original comment may be spurious but it would be interesting to find out factually.

Michael Herrmann said...

OK, so it won't be 65-70%, but now at least we're negotiating. The right number is in between there somewhere.

I think we agree about Amazon's return rate. I would love to see those numbers.

Re the number of books published each year, I am pretty well qualified to assert that at least 50% should never see the light of day. I am not talking about fiction or poetry here, necessarily. There are lots of books in the health and self-help categories especially that are complete wastes of paper. Current affairs? Biography? Also way over-published.

It was the advent of the big boxes that drove this process. They needed lots of titles to fill up 25,000 square feet in Podunk, times 500. Now that the recession will force them to scale back, maybe a return to sanity in publishing will follow.....