I’ve been reading a couple of different things about sales and returns and discounting recently. We’re all familiar with the 3 for 2 tables in Waterstones, but do any of us ever stop to think about what that actually costs the publisher and the author?
I don’t pretend to know the ins and outs of the actual figures and percentages of it, but I understand the general gist. When a publisher sells a bookseller a load of books, it is on a sale-or-return basis; if the bookseller is unable to sell those books to the general public, the publisher has to buy them back, thus loosing the profit they made from selling them in the first place. The principle of this is to prevent the booksellers from having unmanageable piles of unsellable stock, but it is not ideal for the publisher. It makes it much harder for them to predict their profit margins and therefore to plan for the future, especially in smaller publishers where returns could end up wiping out their whole years profit and destroying them.
This is all tied in with the complicated issue of discounts. Publishers apparently sell their books to booksellers at incredibly high discounts (compared to the cost of production) which obviously, again, eats into their profit. This seems to be the only way booksellers are able to make it worth their while buying in bulk. Without the safety net of being able to return unsold stock, they won’t want to buy books from a publisher unless they are even more heavily discounted. So there seems to be no way out of the vicious circle: Publishers can’t sell books at even more heavily discounted rates on a no-return basis because then there will be very little profit left.
Drastic new ways of thinking are clearly needed, so HarperStudio’s new innovative deal with Border’s to sell them books on a heavily discounted, non-returnable basis, splitting the profit 50-50 between the author and publisher rather than paying the author on a percentage-royalty, seems extremely interesting to me; hopefully it will work out and more publishers will be able to follow suit!
Here are all the places I’ve been reading about this, with more detail in most cases!
e-Reads blog: Borders to try non-returnable – possibility world will not end.
e-Reads blog: Is there a better way to compensate authors?
e-Reads blog: HarperStudio President responds to Author Compensation post
Newsstand Forum: No Returns? Economics, Digital Media spurring new Book Publishing models
Snowblog: Returns
Galleycat: Indie Publisher Suing Borders for $1million for excessive returns
(ie it has been claimed that Borders overordered with the intention of returning most of the books in order to recoup cash, or something along those lines…)
Bookseller: Border’s Inc to defend Law Suit
Sowblog: Crimbophobia – the impact of promotional discounts on independent publishers
Books and Biscuits 
March 4, 2009 at 6:14 pm
From and environmental and economic point of view this all seems very inefficient. Presumably the publishers want the stores to order “in bulk” so they can place a big print run from the printer which costs “less” per copy than a smaller print run. As an incentive they offer discounts.
But since the store can return unsold books they will order more than they need in order to benefit from the discount. When they get it wrong as they inevitably will, what happens to the unsold books? Pulped and recycled maybe, but at what cost?
Two things seem to be at the back of this – one is the publishers wish to have their books available on display in the store so that when their marketing connects the customer can easily find the title they’ve been reading about in a review, or seen on TV or whatever. The other is the cost structure of book printing with incentives fro long runs caused by the high cost of setting up a printing press.
In an ideal world books could be printed in an economic batch size of one and be restocked on the shelves within hours, avoiding the dreaded stock-out of marketing nightmares.
But in our current world thousands of tonnes of paper pulp circulate uselessly through the publishing system consuming resources of energy, chemicals, cost and waste on the way.
New books for old, anyone?
March 4, 2009 at 6:28 pm
I think you have it about right – they obviously need you to come in and do your thing, James! 🙂 It seems to be a bit of a vicious circle, with several publishers, especially smaller ones, seeming to put the blame on the side of the booksellers – but of course, as you say, one of the reasons this model of heavy discounting and returns is used in the first place is because it is cheaper for bigger publishers to produce and sell in bulk. There is also the problem that there is no industry-wide regulation on prices, as there is in some other countries – RRPs are rarely followed, and of course publishers cannot collude to fix prices. There used to be what is called the Net Book Agreement, which as far as I understand it did place some controls on discounting levels etc, but it brought its own problems and was abolished a while back. The general consensus of publishing people I have heard talk about this is that the NBA won’t be brought back, but that deep discounting is a serious issue to be addressed.
The rise of Print-on-demand, however, is making it more possible for smaller-scale batches to be produced, so there are new avenues to be explored. I find both the environmental and the economic issues of publishing really interesting, and when environmental and economic concerns can be merged, so much the better!
Definitely fascinating stuff!