May 26 2009
Life After Returns
I’m a big fan of the History Channel program Life After People. During this last workshop, a number of us got into discussions about what would happen in publishing if this thing happened, or that thing suddenly stopped. That conversation got me thinking that it might be fun to try to be a science fiction writer and extrapolate what might happen if some things in publishing suddenly changed.
Now first, understand, this is my opinion, and I welcome discussion and responses. And I could use ideas for topics in this general line of thinking about publishing. I have three or four already, including Life After Agents. I’m going to start with returns first. This might take me a few posts to cover as comments come in, so stay with me.
Also please remember I’m going to slant this from the writer perspective, giving that area the biggest attention. I’m not going to even try to get into how these changes might happen. Just as the History Channel does, I’m going to assume it suddenly happened and go from there.
So, generally following the format of the History Channel series, let me just jump in.
Life After Returns: 1 Hour.
Besides some cheering in publishing houses and a lot of mis-information being spread by writers who don’t understand returns, I doubt in one hour much would change. Some bookstore owners would suddenly be panicked and some publishers after a short amount of cheering would also be calling emergency meetings, but in one hour, not much else would be happening.
A little bit about returns. In the book publishing industry, the bookstore owners are in a rare and wonderful position of having to take no responsibility for their own inventory. This burden is held completely by the publishers. The bookstores can get between a 40% and 55% or more discount off the cover price and take no risk other than their own overhead. If the product doesn’t sell, they simply send it back for full credit.
How did such a really silly idea start? Back in the Depression, publishers stepped in to help bookstores stay open by offering this full return on some books. This allowed many bookstores of the day to remain open and selling the publisher’s books, so during the Depression it was a win/win situation for the industry.
During the Depression, all stores were owned by independent booksellers, and they ordered pretty much directly from each publisher through a sales representative of the publisher. Pulp magazines and comics had their own methods of getting into the corner stores and drug stores and never really got into this mess until later. Paperbacks as we know them did not exist when this started.
As the years went by, because the bookstores had grown to expect it, the publishers kept offering these full returns on some lines and books they wanted to promote until by the 1960s or so it was standard practice that almost all books were fully returnable for full credit.
Now, if you are starting to ask what happens to these books when they are returned, you are asking a good question. Paperbacks have their covers stripped by the bookstore and the covers sent back for the credit and the books trashed. Hardbacks are sent back and sometimes trashed by the publisher, sometimes sold again, depending on a number of factors.
A paperback can have returns of between 30% and 60% and still be successful. That means that if a publisher needs to sell 20,000 copies of a mass market book for it to break even, they have to print and ship at least 40,000 copies. 20,000 copies sell, 20,000 copies end up in landfills or recycled paper bins. A fantastically wasteful way to do business, especially in this new world of saving energy.
And there are a ton of hidden costs. Every book that is destroyed has to be shipped to the bookstore which costs gas and oil and energy, every book that is destroyed has to be printed, which takes energy and costs, and the paper created, and we all know that paper production is one of the most wasteful of all energy industries. Add in the boxes created to ship the books and you start getting an idea of how wasteful the returns system really is.
Life After Returns: 1 Day.
Publishers are scrambling, having tons of meetings at all levels. Publishers would have to revamp overnight all their discount schedules to the bookstores. They would be cutting press runs, but at the same time, they would have no idea how much to cut. Publishers, to sell books must still have market penetration, meaning they have to get the books to the shelves and the reader’s hands. For decades this market penetration has been covered by bookstore owners just not really caring how many of any title they order, thus if the publisher really wanted to put a book out, they could with good sales people and good discounts. But without returns, that all changes quickly.
The sales force would also be going nuts at this point and would be in the middle of all the publisher meetings trying to figure new discounts, talking with their bookstore reps and so on.
Writers will be panicked and cheering at the same time. Those of us who have been around long enough to go through a major collapse of the distribution system (1990s) know that this too shall pass, but it will take some time. For beginning writers, they will have a fear that selling will get harder for a time and they would be right.
For writers, returns show up as a figure on our royalty statements called “Reserve Against Returns.” On the first royalty statement this number can range from 50% and up. Suddenly this will no longer be the case. If a publisher actually ships and sells 20,000 copies, that’s what will show up. So for writers, on the surface, this is a good thing. A very good thing. One major way writers’ careers are killed is by simply having too many returns. And that often is the fault of a bad cover or bad cover copy or a sales force that dropped the ball and sent out too many copies.
Yes, I said too many copies. A book that ships at 40,000 copies and only has returns of 10,000 copies is a success, selling 30,000 copies. But the same book, shipped at 80,000 copies and returning 50,000 copies is a complete failure at the same 30,000 copy sales. See why anyone who really understands returns from the writer side will be cheering during the first day?
Bookstores on the other hand will be in full-fledged panic, but all but the most experienced bookstore owners won’t really understand the problem coming at them just yet. Why should they? They have never understood a business model that forces full responsibility for purchasing an inventory.
I owned a comic book store at one point back in the late 1970s. Comics were bought non-return and I can tell you that every week I worked hard over that order form for the comics to buy. I knew that if I thought I could sell five copies and I only sold two, I ate the other three. They went into my discount bin a few months later and I would be lucky to get even a part of my money back on them. So I was very careful. Bookstores owners will be forced into this mindset very suddenly.
Life After Returns: One Week
One area of publishing that will be in full blown panic at one week are the discount publishers. These are the companies that print books only for discount tables and discount stores. They will be coming quickly to the understanding that their business is in deep danger by the disappearance of the returns.
When you walk into superstore, all the books you see on the discount tables were printed especially for those tables. With the return system, it is better for the store to destroy the book and return the book for full credit than it is to discount it up front. So entire companies have grown up to fill the shoppers desire to have discount books. I have written a number of books and many short stories for those discount tables, my books never seeing the regular part of the store. And mall discount bookstores are the same way with a large part of their inventories. Not all, but some. Often publishers will print a certain number just for those stores at a deep discount. Authors, check your contracts. You don’t get anything for those books, even though they were printed and sold just like any other store.
So when returns disappear, bookstores will suddenly not need the discount publishers, they will simply move their unsold books to discount tables and cut the price. The discount publishers will soon find themselves out of business.
From the writer perspective, this move the book to a discount table instead of destroying it will be a stunningly good thing. A reader finds one of your discounted books on the front table of a store. You have already been paid for it so it’s no big deal to you. But to the reader, they buy your book cheap, take it home and read it. And if you did your job and they like the book, they will return to the store and buy your new book at full price. Having books on these discount tables, given enough time, will be a boon to writers and careers. With the return system, writers are robbed of this natural way to find new readers. Their books are destroyed instead and taken off of their royalty statement.
At one week, the books caught shipping in the middle of this sudden change will end up with a ton more copies in the warehouses and on discount tables because the numbers of copies had already been printed under the old system. This problem has happened to authors throughout time. Cold War thriller writers one day had careers, then when the Berlin Wall fell, they suddenly didn’t. Books scheduled to ship around 9/11 were completely lost and had huge returns. After 9/11, no one moved for a week or more, thus bookstores had no sales and those books were sent back without any reader getting the chance to buy them. Under the current system, a bookstore inventory, at least the new books and the ones up front, are in a state of constant change. You lose a week of sales due to a world event and all the books that were to be pushed that week are lost and quickly replaced by the books coming in behind them. This has killed many an author’s career.
At one week after returns, editors will pretty much freeze buying until all this settles out. They would be far too busy helping the publisher and sales force figure out real numbers and redo all their book profit and loss statements without returns.
Currently all books before they are bought have a profit and loss statement of one sort or another done for them, far before the writer ever knows the book will be bought. This calculation is an attempt to figure out all the costs of the book, from art to overhead to author costs to shipping costs and warehouse costs and everything. If suddenly a book that the publisher and sales and editor thought would sell 20,000 copies only needed to be figured on that number instead of 40,000 copies, it would make a major difference in all the profit and loss statements of every book. So during this first week editors would be spending a great deal of time trying to get all this done for the 100 plus books they have in different areas of their pipelines. No buying of new books for this week, and more than likely for a month to come. The buying will restart. The lists have to be filled each month.
Of course, as word of this got out, writers boards would panic, and many would shout that the sky was falling and all publishing was coming to an end. That’s normal for writer’s boards. Writers, after all, are people who make things up for a living, and often these writers don’t know when to stop making stuff up. Long time pros will just be writing their next books knowing that a system without returns will be a lot better for everyone.
Next installment in Life After Returns coming soon.
