Earthshattering

In one small article on the AP newswire, and one giant rumble in the world of publishing, Borders is going to order books from HarperStudio with the agreement that they will not be returned. Under the decades-old arrangement, similar to consignment shopping, bookstores order titles with little risk. If those titles don’t sell, they send them back to the publisher for full credit AND without paying shipping charges. The publisher takes the books back, then often returns them to the bookstores at a discount for bargain shoppers.

[Feel free to correct me if I’m wrong in my synopsis of the WTF that is the relationship between bookstores and publishers.]

HarperStudio, if your memory is like mine (muddy and often confused), is the imprint at HarperCollins that aims to reduce author advances and follow a profit sharing model instead. The Wall Street Journal quotes HarperStudio chief:

“Returns have never made sense in our business, and with the recent economic downturn, publishers and booksellers are more open than before to experimenting with models that might decrease waste and increase profit,” said Robert Miller, president and publisher of HarperStudio. When he started the imprint earlier this year, Mr. Miller said he intended to shake up traditional book-publishing economics.

So, on one hand: safe bets on sales from established or known money makers for profit-sharing model. On the other hand: isn’t it about time that a different sales model was approached in the book business aside from the severely flawed “consignment” model?

Comments are Closed

  1. 1
    Lady T says:

    You have the whole returns deal between booksellers and publishers exactly right,Sarah(I did a few returns back in my bookseller days and that was not so long ago). I suspect that HarperStudio must be offering something to make up for that major change,especially to the smaller bookstores who have to use returns to make ends meet.

    I do agree that it may be a change for the better;at the place I used to work at(which is no longer in business),many times the buyer would acquire titles simply for the discount given for the returns.

    This lead to a lot of dead wood lying around on display-for example,we would have a dozen hardcover copies of a genre series(romance,mystery and sometimes sci fi) but none of the earlier books in that series in our inventory. We’d be lucky to sell one book after several months(most publishers have a time limit before you can send stuff back to them for credit) until it was necessary to pull it to pay the bills. This wasn’t just one stack of books;it was over a dozen taking up valuable space in overstock and on the display tables,shelves,etc.

    I’m not saying that every small or big store does this(for the record,I’ve only worked in one book store,so I can’t speak for the whole industry) or abuses the returns system but maybe it is time to try something new here.

  2. 2

    I’ll bet Borders doesn’t order as many books from them now, and newer authors aren’t going to have a fighting chance in the stores.  We’re going to be seeing smaller print-runs from HarperCollins now.

  3. 3
    L.C. McCabe says:

    I saw a link yesterday on [html=http://editorialass.blogspot.com] Moonrat’s blog [/html] about an essay written by Richard Curtis that talks about the effed up return system that is the current model for publishing.

    It’s an excellent piece, but you must be sure to read it all the way to the end to get the zinger and real point of the piece.

    [html=http://www.ereads.com/2008/12/behind-publishings-wednesday-of-long.html] Behind Publishing’s Wednesday of the Long Knives [/html]

    (I hope all my code worked. I’m just winging with how I think it goes. Apologies if it winds up looking funky.)

    Linda

  4. 4
    L.C. McCabe says:

    Okay, so that looked pretty lousy. Here is the message again without trying to use fancy tags that obviously do not like me.

    I saw a link yesterday on Moonrat’s blog – http://editorialass.blogspot.com – about an essay written by Richard Curtis that talks about the effed up return system that is the current model for publishing.

    It’s an excellent piece, but you must be sure to read it all the way to the end to get the zinger and real point of the piece.

    Here’s a link to it:

    http://tinyurl.com/6fznru

    Linda

  5. 5

    Jennifer Armintrout: I think there is already a trend towards publishers only publishing books that have the potential to be blockbusters. Anything by a new writer or anything that pushes the boundaries of a genre might just be overlooked as too risky.

    That said, if this makes bookstores more likely to buy smaller quantities of books, wouldn’t that have the opposite effect? Would a bookstore be more willing to pick up a book that isn’t a sure thing, if they only had to buy a few instead of committing to buying lots that might have to be returned? Would publishers therefore be more willing to publish such books instead of only the ones that are guaranteed to sell millions?

  6. 6
    darlynne says:

    As Lady T said above, you’re right about the return policy, which was especially important for small booksellers. Hard covers were routinely returned to the publisher after 90 days. It was an enormous undertaking, done without fail, and is one of the reasons smaller stores didn’t receive the deeper discounts: if you’re going to keep the books, you’ll pay less. We did not ever re-order the same books to get another discount. At least, that was my experience in an independent store.

    The other part, however, was the mass market paperbacks. Those could be returned as well, but only the covers. Yup, the owner of the store in which I worked would routinely go through the paperbacks and tear off the front cover, which was bundled along with all the other torn covers and sent in a very large pile to the publisher for a refund. Seriously, to this day, the sound of covers being torn from their books is as fingernails on a chalkboard for me, with a side order of queasy thrown in. That’s why you’ll see the warning on paperbacks about books without covers: the store has received credit and the books were to be destroyed since it was too expensive to physically return them intact.

    I haven’t read the article mentioned above yet, but certainly the policy has been around for awhile. If you talk to small bookstore owners, however, they’ll tell you they can’t afford to stay in business without return privileges. It’s a dilemma and I don’t know what the answer is.

    As a reader, I’d hate to see less availability in the stores, which is what will happen if no one can afford to take a chance on books that might sell or aren’t guaranteed bestsellers. That was the whole beauty of hand selling, something the independents do better than anyone.

  7. 7
    Carrie V. says:

    About ten years ago I worked as a buyer at an independent bookstore, and I can tell you exactly how the returns policy got started and why it persists.  Three times a year, we had meetings with the sales reps of all the publishers (it was about dozen at that time).  Every single time, they’d have a couple of titles that they had been instructed to push the hell out of.  As a buyer, I had to be cynical.

    Sales rep:  This is going to be the next big thing.  You really need to have a stack of twenty at the front of the store.  Make that 50, you don’t want to get caught flat footed.
    Me:  I’ll take 5.
    Sales rep:  I really think you need more than that.
    Me:  You say that for every single lead title every single season.  You’re right 10% of the time.  I don’t want 50 books that aren’t going to sell.
    Sales rep:  We’ll give you a discount on a big stack of books, and you can send them back if they don’t sell.
    Me:  Okay, fine.

    For a small independent, it’s easier to rush order something that’s selling well from a wholesaler than it is to take a chance on having a big stack of books without a return policy.  With returns, bookstores will take fewer chances.

  8. 8
    Carrie V. says:

    That last sentence should read “without returns…”

    Sorry…

  9. 9
    darlynne says:

    Would a bookstore be more willing to pick up a book that isn’t a sure thing, if they only had to buy a few instead of committing to buying lots that might have to be returned?

    Brenda, generally stores don’t have to buy a set number of one title, but they may have to put together a minimum order requirement. IMO, this is where ARCs are going to become increasingly important, as will the need to get them into the hands of sellers. If a seller loves a book and knows she can sell it to anyone who walks or crawls through the front door (and that’s because she knows her customers) she will take the chance on the new, different and unknown, regardless of the return policy.

    For example, the small store I’ve been talking about found Peter Watson’s Landscape of Lies, loved it so much and bought, I kid you not, the entire US inventory. This may have been a couple hundred copies at the time—a huge investment for such a small store—but they sold every single copy and hunted around for more.

    The sad reality, though, is that even a small quantity that doesn’t sell represents significant money to the small stores. And that’s why we’re already losing so many of them, and that’s with a refund policy.

  10. 10

    The old system is definitely flawed.  BUt I’ve got to wonder how this is going to work, too.

    Something has to give, though, that’s for sure.

  11. 11
    Poison Ivy says:

    Ironically, the returns policy in publishing was started during the Depression as a means of coaxing booksellers to stock books in tough economic times. The idea was that they would be taking no financial risk by ordering copies. And it worked.

    But the percentage of returns has gotten higher and higher over the decades. When a book sells only 33% of the copies that were printed and sent to stores, there’s something wrong with the system. Especially when the returns often are not returned, but have their covers stripped and then are cavalierly tossed in the store’s garbage cans with no effort to recycle the paper.  I don’t know if returns warehouses (usually book distributors have those) are still burning returns, but that’s what they used to do.

    Yet, effective distribution usually is a matter of having enough copies per sale site to generate a sale—and one or two copies is not likely to make enough of a display to do it—without overkill. There is constant effort by distributors to allocate copies so the minimum are shipped in to each point of sale. I imagine that internally, Borders et al. do the same.

    But even so, sales are always a mystery. We know some things, but nothing is constant. For instance, behavioral economics tells us that if people see that a book is a big bestseller, they are more likely to buy it, so they can read what others read. Thus the justification for sending in hundreds of copies to each store. The store then is forced to put up a huge display, and the display convinces the customer that the book should be read. Does it work? Yes and no. Really. Sometimes, it just doesn’t work, even though it’s supposed to. Or it might work in one store but not in another. The distributor or the internal arbiter at Borders or wherever uses prior data on that particular store with the hope that it carries over to that particular book. But it’s still a risk and a mystery. Returns are about sharing the risk.

  12. 12
    Suze says:

    This whole mysterious and vicious cycle is why e-books appeal to me on a philosophical level (said the woman who has yet to bite the bullet and buy an e-reader).

    Just from a vague overview, the inefficiencies of the publishing industry are crippling it, to the detriment of publishers, authors, and readers.  If more people could afford e-readers, and bought e-books, then this whole waste cycle of returns and destroyeds would pretty much evaporate.

    Maybe smaller print runs to have examples in stores, where you could download e-books of the ones you wanted to buy?  My mind keeps taking me into a Star Trek-like shopping mall, where there are display models, but you don’t actually bring anything home; it gets sent to you.  Wow, that would make shopping trips to the big city ever so much easier.  No packing stuff back to the car, no worrying about stuff not fitting in the car, you could take mass transit because you didn’t have packages to worry about.

    A forward-thinking publisher would be pushing for a standard, cheap, easily-available e-reader, and looking at print-on-demand options, so that the standard is e-book and hard copy is the exception.  In my not-very-humble, and yet extremely-uneducated-about-the-issue opinion.

  13. 13
    HaloKun says:

    Sorry you guys but you are about 80% right.  We bookstores can return MOST of the books we purchase but not all.

    And the publishers DO NOT always pay for shipping.  For a small bookstore it’s actually more beneficial to keep the older hardcovers that have been hanging around the shelf for two years and sell them for $5, than return them to the publisher and pay for all that freight cost.

    Also they don’t always give us full credit.  And you only have a small window in which to return books.  Big Dealers that are not actual publishers can be even harder to return books too as they don’t always give us a discount.  Which means you are paying exactly what we the bookstore had to pay for the book.  So when you see heavily discounted hardcovers and bargain books it’s just us trying to get what we can out of books, since they are at that point worth nothing.

    Then there’s the whole stripping thing… which tends to offend people for some reason…

    Despite what everyone in the reading world thinks books are not sacred unless someone buys them and/or takes great care of them.  Otherwise it’s off to the mulch farm!  And frankly 50% of books published in America deserve to be there.

    paper65: We should be reducing the amount of paper we use by not over publishing and embracing the e-book market.

  14. 14
    HaloKun says:

    BTW, the book business is the only medium where the margins are chosen for us by the publishers.  That’s what needs to change.  We need to be able to work out our discounts and price points like the big boys do.

    Now they want to take away the one thing that keeps us going; returns.  We can’t return books then we close down.  It’s just that simple.

    OR the publisher’s need to drastically f*ing reduce the amount of books they publish, and save money that way.  That may actually even help indie stores because then we would be ale to stock up on collectible items and set market prices.

  15. 15
    Nora Roberts says:

    For a bookstore like my husband’s indie, this would mean not ordering non-returnable books except by known sellers. No taking chances on new authors or books that look/sound interesting, but may not move. He wouldn’t be able to afford taking chances. I think this could hurt the new and midlist authors, esp in indies.

  16. 16
    SB Sarah says:

    So from my seat in the nosebleed section in the Arena of Publishing, I ask humbly: what do you think would be a better solution?

    I am skeptical of the HarperStudio model, because it seems like revolution when likely it will be the same key moneymaking guaranteed sellers in the “profit sharing” model. It’s safe to take “risks” with the economic setup when the authors are known sellers, right?

    So what would be better, in your collective opinion?

  17. 17
    Suze says:

    I’m surfing around on my lunch break, and there are are sample chapters available of The Vorkosigan Companion on Baen’s website.

    In the chapter entitled “Publishing, Writing, and Authoring:
    Three Different Things” Lois says:

    Reader input is limited to an expensive and wasteful negative—readers can (and do) reject books they do see, but they have no way of asking for books they don’t see.

    Such was the hair-tearing state of the business up to the middle of the Nineties. Then along came the Internet. And publishers’ Websites such as Baen’s Bar. And Amazon.com, with shelves that never get too full to hold More Stuff. And, most critically—word of mouth got hyperdrive through chat groups and email. Word of mouth got faster, even, than the system’s book-removal rhythm.

    And suddenly, publishers had an economical way of getting the word out to the excluded people in this process, the actual book readers, of their books’ existences—totally jumping over the unfortunate book-blocking nature of the distribution system. Instead of trying to push books through the pipeline, this intelligence network potentially allowed a thousand or ten thousand actual readers to line up on the other end and pull the books through—the books they wanted, not the ones some desperately overworked distribution exec imagined would sell. It was briefly very exciting and hopeful—until the Internet filled up. Still, those new lines of communication are solidly established now.

    She mulls on for several more pages.  How odd that, from so many different directions, this topic is leaping into my eyeballs today.

  18. 18
    Chicklet says:

    I think this could hurt the new and midlist authors, esp in indies.

    This made me think of the people who theorize that within a few years, the five broadcast television networks (ABC, CBS, NBC, FOX, CW) will be home to nothing but cheap reality shows and the broadest of scripted programming (or possibly no scripted programming at all), while the more creative shows will air on basic or pay cable. In other words, the business model will change industry-wide.

    I wonder if something similar could happen in the book business: Anything (or anyone) new or slightly out-of-mainstream will be available as ebooks, and paper books will be available only by bestselling authors or one or two new authors per year, who are heavily advertised by the publishers.

    The other thing to keep in mind about this news article is that Borders is (apparently) on the verge of failing, so they may be trying new things out of sheer desperation. In general, I find the returns system to be so incredibly wasteful (between the cost of materials and the costs of distribution, including fuel and delivery personnel) I can’t believe it’s hung on this long.

  19. 19
    Kathleen O'Reilly says:

    I do think there is big changes in store for the industry, because slowly, the indies are becoming an extinct species, and the publishers have to figure out a way to stay alive.

    In the Harper model, I think there’s five separate pieces to the equation: the publishers, the big box stores, the Walmart and Costcos, the indies and the ebooks. 

    With publishers, I would assume they would publish a smaller catalog of books, in smaller print runs.  They might go with ebook only for the more cutting-edge books, or literary fiction, or move to a POD model.  I don’t think the model would eliminate the small or midlist authors, but I do think it would cull the ranks, which might not be a bad thing.  The bookstores would act like gatekeepers, and maybe instead of having a sales team suggest titles, maybe the publishers would do more advance reading from booksellers, etc to get an idea of which titles would pay off.  Use more focus groups, etc, like a regular product-based company would do.

    With the big box stores (non-Walmart, Costco), I’m assuming a non-return model would make them order less of the huge orders they’re doing now, go towards a pre-order model (supplies of the next Nora might be limited! Order now), and I’m not sure how it would affect their small and midlist orders.  I mean, if I go into B&N;and all they have are everything that Danielle Steele and Stephen King have written, I wouldn’t go back.  The beauty of a bookstore is browsing, and I don’t think B&N;can afford to turn their bookstore into something resembling an airport book kiosk. 

    With the Walmart stores, I don’t know that this would change much, and at Costco, I think this is something similar to the model they’re already operating on.  Deep discounts, small catalog of titles available, and not an overflowing quantity of any one title.

    With the indies, there would be lots of issues.  It would be interesting to see if either indies become more narrow in their focus (i.e. SF only), or go towards a POD model.  I don’t know. 

    I do think the publishers are pushing this way, and I’m not sure they can survive without some sort of new model.

  20. 20
    Heidi says:

    Hmm.. Interesting topic. Let me speak as someone who worked for a bookseller/publisher mail order company who sold both academic workbooks to academic bookstores and also sold books by mail-order that we published and also books we did NOT publish. So, let’s say, I’ve got an opinion from all sides.

    From the academic workbook side. B&N;is the absolute pits to work with in the academic bookstores. They ended up being PAY IN ADVANCE with us, at their great consternation, because they would 1)order at the last minute, incur great 2nd day or orvernight shipping charges ‘cause these workbooks were heavy, and then “oh, we can’t pay that shipping, I don’t know who authorized that, but we can’t do that, so you will have to EAT IT little bookseller” we’re talking $70-80 up to $200 per order. 2) okay, send us 200 books RIGHT AWAY, but we’re going to cancel the class and send you back all of them but we’re not going to remove our bookstore price stickers from them so you’re going to have to do that so that you can resell them to someone else who doesn’t want our bookstore pricetag on it. hmm.. problem? but why? 3) these workbooks were triple-punched so that they could be put into a notebook and handed in as homework by separate pages, so they were shrink-wrapped so that none of the pages were lost with a large piece of paper shrinkwrapped onto the front saying THIS BOOK WILL NOT BE ACCEPTED FOR RETURN IF THE SHRINK-WRAPPING IS MISSING, SO PLEASE MAKE SURE THAT YOU ARE GOING TO USE THIS BOOK BECAUSE UNDER NO CIRCUMSTANCES WILL THE BOOKSTORE ACCEPT THIS WORKBOOK BACK FOR RETURN IF THE SHRINK-WRAPPING IS MISSING BECAUSE IT HAS LOOSE PAGES and yet we continued to get books back with the shrink-wrappping off of them 4) oh, by the way, we sent back 800 books but we didn’t ask permission and we didn’t let you know and BTW we went ahead and did a “chargebook” which we are going to proceed to put against our bill for this bookstore, and maybe for another B&N;bookstore in Florida, and maybe another one in Michigan, and maybe another one in Tallahassee. Hmm, what do you mean our accounts are screwed up with you? What do you mean we’ve already used that chargeback 3 times? What do you mean we owe you $1,892.77? Huh? 5) okay, we’re going to order 35 books from you on 30 days net, then put them into our bookstore, ignore that we’re supposed to pay for these books and wait until we sell them and get OUR money (yes, we charge the students double what we pay for them from you) and then we’re going to return the extras, and THEN when we get our money from the students in advance and we get our return credit from you, we’ll THEN pay you. Sorry if it’s 90 days after we’ve ordered and received them. Sorry if you have employees to pay, overhead, etc. It must really suck to be you, but I’ve only worked here for 9 minutes (B&N;has HUGE turnover) and so I don’t understand what you’re saying to me. We like to get your books on spec, get the money for them, return the extras, and THEN actually pay you for them. So I guess the little bookseller/publisher just has to SUCK IT UP? right? Publish those books and workbooks and send them out and then just wait until you sell them to actually have you pay us??? Sound fair?

    Sorry, I’m getting off of my soapbox. I know that examples like B&N;academic bookstores are rare. They were absolutely HORRID and sometimes other bookstores would try to run the scam as well. That’s where the PAY IN ADVANCE and RETURN PERMISSION guidelines came from. At least to my personal knowledge and experience.

    As for selling retail books, we bought books expecting to keep them. We sold in-print books that we published along with other books on the same subject (non-fiction western outlaw-lawmen 1900s…snoozefest) and we also sold out-of-print books as well on the same subject, including Custerania, soldiers, Gold Rush, etc. So, any of the books we bought for the in-print catalog from other publishers that didn’t sell we’d just keep and stick into the out-of-print catalog a couple of years later when you couldn’t get them anymore. Usually at the same price they were at in the in-print catalog, you just couldn’t get them in hardback anymore.

    My personal feeling is that if you don’t ABUSE the return privileges, then okay. But also Amazon used to do stop orders when they first started. We used to have a policy when we were selling our retail (outlaw/lawmen) books to other bookstores for non-academic retail sale. For under 5 books, 30% discount and free shipping if you paid in advance. So we did actually used to pay for shipping if the order was paid in advance. I think that was fair. Now, I’ve been out of the bz for 10 years (selling & having to do shipping) so I don’t know what’s going on, but shipping is a big factor and takes a chunk out of profits. I think it WILL make booksellers more hesitant to buy books, but then they are just going to lose out to Amazon and the other on-line booksellers.

    Great food for thought!
    Heidi

  21. 21
    Heidi says:

    and to make it a little more understandable why I”m yelling about B&N;, we had accounts with probably 125 academic bookstores of theirs all over the US and Puerto Rico, and our business with them account for probably about $80,000 of our annual profit. So when they were jerking us around it was a BIG deal to us. And when they were swinging those chargebacks around, using them against 2-3 invoices at a time, it was a LOT of money they were trying to cheat us out of. ~sigh~ It’s been 10 years, and I’m still not over it. Maybe therapy? ;)

    Heidi

  22. 22
    Jen says:

    [quote=“Nora Roberts”]For a bookstore like my husband’s indie, this would mean not ordering non-returnable books except by known sellers. No taking chances on new authors or books that look/sound interesting, but may not move. He wouldn’t be able to afford taking chances. I think this could hurt the new and midlist authors, esp in indies.

    B&N;‘s policy is not to order non-returnable books, either, and my good friend/local store CRM tells me it’s an edict handed down from On High, so it’s a company-wide policy.

    Without B&N;(even if your book is listed in the Ingram’s catalog), you’re pretty much not on the shelves anywhere, and if you’re with a small-press/epublisher who does limited print runs for good sellers, it doesn’t matter whether or not your book sells well with the publisher, it’s dead right out of the gate when no B&N;in the country will touch it because the publisher would be stupid/bankrupt/crazy to accept returns.  And with a corporate policy on not ordering non-returnables, even if you do have a local population that would eat up a particular title or a hand-seller at the local level, it doesn’t matter—corporate policy trumps it.

    Publishing’s got some brilliant minds to it.  If they can’t come up with a solution, then the face of the industry will have to hit the ground before it can change.

  23. 23
    Ann Bruce says:

    B&N;’s policy is not to order non-returnable books, either, and my good friend/local store CRM tells me it’s an edict handed down from On High, so it’s a company-wide policy.

    And if all publishers go the way of Harper?  Will B&N;not buy any books at all and close its doors?  Just askin’ because Harper is not the only publisher that needs to cut costs.

  24. 24
    --E says:

    Well, up until 9 months ago I worked for Harper, on the paperback side. I don’t know what the heck this new imprint is all about, but here are my wild-ass guesses:

    1. Ebook sales have been growing at enormous rates throughout the industry. We’re talking doubling sales every six months or so. That pace will slow down, I’m sure, as the exponential factors kick in, but you don’t need to be prescient to figure that the sea-changes in the industry are only beginning. Sooner or later someone will improve on the Kindle and Sony Reader and make a reader that accesses the internet, looks like paper, and folds up into your back pocket. I figure less than three years to the first iteration, less than five years to something equivalent to an iPod for words.

    2. The upshot of that is that distribution becomes less and less of a factor in the industry. Returns cease to matter, paper and printing become less of an issue. Expenses come down as a result.

    (The only problem I see in this equation is the issue of advertising—despite the adage, people still judge books by covers. Word of mouth is good, but you have to get the first people to read it so they can tell their friends. However, I suspect this problem will solve itself. People will figure out how to find good books. Blogs such as SBTB set the example.)

    3. The non-returnable situation Harper is setting up is for a particular imprint of books. This imprint promises a “profit-sharing” model, with low or no advances, and the authors getting 50% of profits. (I am very interested in hearing how “profits” are defined in that equation.)

    4. Under a conventional model, an author’s advance moneys on a hardcover account for 10-15% of the cover price of a book, or 20-30% of the half the publisher gets to keep (the other half of the cover price goes to the bookstore. Indy booksellers get less than this, but Borders, B&N;, Amazon, Costco, etc all get 48-52%.)

    5. So, by eliminating or greatly reducing the author’s advance, the publisher frees up another 25% of the cover price to offer to the bookseller as an incentive to take the book without option for return. If the book has only a 50% sell-through (and books on average do better than that), the bookstore doesn’t lose a cent of what they would have made on a conventional model.

    I hope the publisher doesn’t offer the full bonus percentage to the bookstore. That cuts the profit that the author is supposed to be sharing. You may as well have the author take their advance and pay it out to the bookstores directly.

    This smells of a big screw to the authors who sign on for it. However, as so many self-publishing ventures have discovered, there are an infinite number of wannabes who will go for it, probably with promises that if their book does well, they’ll get an advance on the next one.

    The other possibility for this working is to bring on big-name authors. But few enough of their books get returned anyway, and there’s no reason to offer the bookstores bigger incentives to take their books.

    This seems a means to stop offering huge advances to untested writers (and perhaps to stop offering even the small advances dependable midlisters get). Bloated advances have been hurting the industry for some time, and led directly to the meltdown of Black Wednesday.

    It will be interesting to see if this scheme works. Unfortunately, it seems that the risk is being assumed by the writers, not the publisher nor the bookstore.

  25. 25

    I’ve never posted on SBTB, but this is a topic I can’t resist.  Yes, the returns policy began during the Depression as cited.  However, what began as a consignment system for all-but-exclusively independent book shops spiraled into a financial float between book sellers, chains, and publishers.  In addition, the latters’ reserve against returns policies hold a percentage (arguably arbitrary) of author royalties for anywhere from a year to forever. 

    In other words, the publishing and selling arms of the business can trade credits back and forth on inventory, while the writer seldom, if ever, earns full royalties on those perpetual reserved against return copies.  Writers have no clue what inventory deadlines apply or don’t.  Receiving statements showing a reserve held many years after a book was published and now out of print is common. 

    Is epublishing a remedy?  As a reader, I sincerely hope bona fide books with pages and covers don’t vanish from the landscape.  As a writer, I’d like to believe epub accounting would speed royalty payments.  A certain hunk o’ cynicism remains.  Particularly as relatively few readers own, want, or can afford Kindles or other-branded gadgetry.  Generally speaking, a majority of the population spends too many hours a day basking in the glow of computer screens as it is.

  26. 26
    Rachel R. says:

    B&N;’s policy is not to order non-returnable books, either, and my good friend/local store CRM tells me it’s an edict handed down from On High, so it’s a company-wide policy.

    That may be true for customers placing special orders in the stores (too many cases of fraudulent orders, though I suspect the actual policy is “you pay up-front, and we’ll ship it to your home” as a way to satisfy the customers without getting burned), but B&N;does order many non-returnable titles for its stores.

    My suspicion is that HarperStudio offered Borders a deep discount to purchase their books on a non-returnable basis (I have no inside knowledge of this arrangement, but it’s the only way I can see this working).  Borders is struggling, and a good discount is probably very attractive to them right now.  (And that said, they’re probably going to end up eating a decent amount of inventory; that’s the drawback with ordering titles non-returnable.  The inventory you can’t sell sits around in your stores and your warehouses, taking up space that could be used for titles that may sell better.)

  27. 27
    --E says:

    According to Publisher’s Lunch, HarperStudio offered an additional 10% or so in the discount to Borders. That seems rational and less screwriffic to the authors (again, depending on how their contracts define “profit” in HarperStudio’s business model).

  28. 28
    Virginia says:

    A. I hate e-books, I love reading the jackets, the back covers, love handling them, smelling the brand-new pages. Bizarre, perhaps, but I think I am on the computer long enough to enjoy a break from it.
    B. Why don’t bookstores offer just a few copies of each book-except for the big names who you know you will sell anyway? You really don’t need a campaigning blitz to sell the final installment of Nora Roberts Sign of 7 or a Danielle Steele. Just an announcement that the latest is in-I’m first in line for Nora and many established authors do a nice job of publicizing themselves (I’m sure with help from the publisher). Just got a postcard on the latest Eloisa James since I am signed up on her web-site. Use the money to promote newer authors and then reorder more books when necessary.
    C. Independents have an advantage the chains don’t have-it is known as personalized, individualized service.Personally, I think they are best when they are not promoting the best-sellers-or stocking them to the exclusion of other books-that’s suicidal since every grocery store carries them. We had a great bookstore around town that closed, not because it did not have a great deal of business-but because it was so busy that the people who owned it for 25 years got tired of running it 7 days a week and retired!They knew the type of book I was interested in and would let me know that they had something I would enjoy. Invariably they were correct.
    They certainly knew how to promote a book.If they were promoting a particular craft book, they had a crafter come in and demonstrate, they had book-signings with local authors, book discussion groups;etc. It was very personalized service and they knew their customer base, the keys to success as an indie. You can’t get that at B&N;or Wal-Mart. And not once did I see a discounted book or a sale, one of the results of not overstocking-if they needed more, they ordered more.

    Business models in all industries need to be re-evaluated, publishing included to get rid of the bloat, the waste.

  29. 29
    Abby says:

    “If you talk to small bookstore owners, however, they’ll tell you they can’t afford to stay in business without return privileges.”

    What do other retailers do? I thought a retailer – a clothing store, a drugstore, a CD store, whatever – had to buy stock, pay for it, and try to sell it at a markup. If they can’t sell it, they put it on sale at cost or a loss. Surely other retailers assume that risk as part of doing business?

    What makes bookstores different and entitled to return stock? Unless HaloKun is correct: “they don’t always give us a discount.  Which means you are paying exactly what we the bookstore had to pay for the book.” If bookstore margins are ZERO, how do they even stay in business for ten minutes?

    I guess the real question is – what are the margins? If publishers are dictating the margin and making it low, then that is what has to change. Either the cost of books has to go up, or the cost to the bookseller has to go down. Anything else will continue to eliminate bookstores.

    Heidi, your post was fascinating.

  30. 30
    Rachel R. says:

    What makes bookstores different and entitled to return stock?

    Don’t really have an answer for that one, except that the book industry is a strange one.  I think it has something to do with the leverage of retailers (there are some publishers who do direct-to-consumer sales, but the vast majority of them rely on retailers, which gives the retailers the ability to at least negotiate terms) coupled with the uniqueness of the product.  A pair of jeans is a pair of jeans, regardless of who made it or where it’s sold (there are different brands, but generally when people buy a pair of jeans, they stop at the one), whereas if you want to buy a Terry Pratchett book, there’s only one company who puts those out.  And people don’t generally say, “Well, I’ve just purchased a mass market, so I don’t need to purchase another mass market for another couple of years”. 

    And because bookstores thus have to carry a larger inventory than retailers in other industries, they want to return stock they can’t sell, so that they have room in their stores and warehouses for new titles.  Hundreds of thousands of titles are published every year; you can’t order enough books to fill your bookstore and have them all be non-returnable—because of the size of the inventory, you’ll go out of business in no time.  You have to return titles to make room for more.

    “they don’t always give us a discount.  Which means you are paying exactly what we the bookstore had to pay for the book.” If bookstore margins are ZERO, how do they even stay in business for ten minutes?

    I can’t give a complete answer to this one, because every bookstore negotiates a different deal with the publisher, and discounts in the book industry (at least in the US) have been so intensely litigated that no one wants to talk about them in specific terms.  But in general terms, textbooks are good example of the above situation: you the bookseller receive close to nothing in terms of a discount, but the publisher sells it to you at a price slightly over cost (well…that’s the claim, anyway; textbook prices and whether they really need to be as high as they are is a whole other topic), and there’s no price printed on the book, because while the publisher will often give a “suggested” retail price, it’s really up to the bookseller to sell the textbooks at whatever price makes sense for them to make a profit.  (This doesn’t happen with “trade” books: the publisher sets the price, and the retailer makes money from the sales based on the amount of the discount they receive from the publisher.)

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