Friday, October 06, 2006


In the 1930’s, Albert Knopf reacted to the Depression-fueled decline in the number of American bookstores by proposing a radical new business model: he would allow bookstores to return unsold books for credit towards other titles from his company. Now, 70 plus years later, that business model is still going strong. In fact, it has become the industry standard – so much so that bookstores can afford to refuse to stock books from publishers who will not allow remaining books to be returned.

This remainders process is not the only concession that publishers have made. At present, it is not uncommon for a publisher to give a bookstore a 90 day grace period before paying invoices for shipments of new books. Combined with co-op – the term for the money paid by a publisher to bookstores in return for favorable placement of high-profile books, something I will discuss when I come to marketing – these business practices mean that the publishing industry has taken on the role of more-or-less subsidizing bookstores.

At one time, all of this made sense. Without a market to sell the product in, a publisher is just a guy surrounded by a lot of paper. The irony of the present situation is that bookstores are no longer the primary source of distribution; instead, they share an uneasy second place with online retailers like Amazon. (Just to be clear, it is not even an either/or situation. Hardcore book readers use both distribution methods as their moods suit them. For every book specifically recommended, located and bought online, there is another that was purchased after long, satisfying hours browsing the stacks.)

But publishers cannot really complain about the situation. After all, they have very carefully, lovingly and specifically placed their testicles in a vice and even given the handle a few twists before handing it over. With the amount of money spent out in the process of getting books to market, it is a wonder that publishers make any real profit – in fact, I have a sneaking suspicion that the profit margin is largely aggregate, spread thinly across the entire catalog.

The boot to the head is that bookstores have started a policy of only ordering as many books as the author’s last title sold. So if an author had a single bad title, the orders on his next book will be just as dismal – regardless of how many copies he has sold over his lifetime. On the surface, this looks like an honest attempt by the bookstores to reduce the environmental waste caused by the inefficient remainders process. However, what this means for the poor authors who are subject to the whims of market forces is a relentless publish-well-or-perish mentality that will probably force a fair number of authors out of the industry forever (or until they can convince someone else to publish them under a new name).

Is there an easy solution to this situation? Probably not, otherwise someone would have suggested or implemented it by now. However, it is important to point out that even something as trivial as smaller print runs for first time authors would alleviate some of the waste and uncertainty. But how do you decide how many books to print for an author with no track record? To be honest, that’s mostly a marketing decision. Still, there are always options. Print on demand, for example.

For those that do not know, there are two predominant methods of book printing. The industry standard is offset printing, which is cheaper (on the front end) because it involves large print runs. However, because there are only educated guesses for the initial number of books to print, the remainders process can cut into the money saved by using a cheaper process. On the other hand, print on demand is slightly more expensive. The benefit with this process is that it allows the publisher to order more exact print runs, in accordance with real time orders and pre-sales. It also allows books to remain in print pretty much forever. And more books in print for longer periods mean that publishers will always have a steady trickle of revenue, even from books that were considered long past their profit-by date.

Of course, if it was that easy, publishers would have made the change already. Unfortunately, the printing companies who work for the book publishers have a vested interest in making sure that offset printing remains the industry standard. It doesn’t matter much to them if the remainders process is wasteful – either way, the publishers pay for the books to be printed.

In any case, it is surprisingly difficult to be both sympathetic and callous towards these three links in the supply chain. They are just trying to do business and protect their own interests. They are, after all, institutions and would like to continue in those roles for some time to come. In the end, inefficiencies do not matter as long as operations are profitable enough. And, right at the moment, they are.