C[r]ash Flow (Or What Went Wrong in October in Book Publishing)

By: DG (@ RedRoom.com) with Permission to repost!

It's one of the most important things that has happened in this sudden economic downturn recently, so I'm going to go ahead and kill the elephant.

Let's talk a little bit about what happened in October.

You've heard about the massive layoffs at Doubleday; you've heard about Harper's terrible state of profit, BNN's worst quarter and projected year ever, and the closing of Impetus, an indie press (which, as I'll explain below, I don't think was Impetus's fault even vaguely).

Yes, there's a crisis.

However. Anyone who wants to talk about "the death of publishing" can leave the room. I'm passionate about my chosen profession of writing and also about books in general; a lot of you are yet-to-be-published authors and I'm sure you're equally intent on not seeing book publishing fold (not that it's going to; that's ridiculous). So instead I want to talk about what's actually causing the problem--it might help us come up with solutions for protecting what's important to us.

I don't think anyone's being really straightforward about what exactly happened, and a lot of it is not very complicated.* The crux of the problem is that book publishing is a returnable industry. That means that say Big Chain Store (BCS) agrees to stock a book that my company publishes. They buy 100 copies at, say, $1 a piece (to be easy). They give me $100; I send them the books. Two months later, they didn't sell any, so they send them back. I have to give them $100.

Keep in mind a couple of things about this system that don't work in the publisher's favor:
1) Shipping costs. Books are heavy.
2) Production fees incurred by the publisher (because, unfortunately, we can't return the books to the printer).
3) Inflation. Haha.

Why do publishing companies put up with this? Yeah, it's stupid. But it's an industry standard, and if they don't let BCS have the option to return books, they simply won't stock them. They can carry CDs and calendars and greeting cards, instead.

All right, but this has been the case for awhile. So what went wrong in October?

As you MIGHT have heard by now, we're having some kind of economic hardship (or something like that). So people spent less cash in September and October. So bookstores sold fewer copies in those two months, and were hit hard like all the other businesses in the country and in a lot of the world.

However, BCS and all its chain compatriots are counting on Christmas sales to save them. They need to stock up! They need to plump their stores with new enticing merchandise so they can convince customers to save them from foreclosure!

Where to get the cash for all the holiday books they needed to stock in October and November? Three. Guesses.

In October, bookstores returned so many books that most publishing companies had more coming into them than going out of them. For some companies, the incoming number was more than several months' outgoing.

Although bookstores are suffering (and how), it was the publishing houses that had to absorb the cost of this cash flow creator. This is why Impetus, a relatively new indie company without the history to survive this shock, folded. Some houses lost so much money in returns in October that profits from the entire rest of 2008 have been negated. Can you imagine? Losing enough in a month to destroy your entire year? (Keep in mind that publishing is a very low profit margin enterprise in the first place; now see how if one month involves more outgoing than incoming money you can easily undo the good of an entire year or more.)

Now you can see the ripples that are happening, the layoffs, the dwindling advances, the precautions about acquiring anything in this climate. If publishing companies are shelling out money to publish books that bookstores only bother to stock for a minute and a half, publishers are all going to hemorrhage money until there is nothing left standing.

This would be a bad situation for more than the sake of my profession or your future novel. It's about a lot of things--education, hampered information dissemination, conglomerations swallowing mass media, censorship. Whatever. I could extenuate, but I'll spare you. The point is, when you have a problem, the best thing to do is try to solve it.

For anyone who cares about the book publishing industry and wants to do their part, there's one simple action step:

Buy a book this weekend.

Just buy one.

Buy your sister a book instead of a sweater for her birthday; buy your friend who can't even make toast or boil water a beginner's cookbook; buy your company's receptionist a novel you liked because most people probably ignore him/her (it's always a her, though, isn't it?) and you'll make his/her day.

Buy your holiday gifts now. Instead of a CD for your brother, buy him a book on his favorite recording artist.

Instead of going to the library this one week buy the book you were going to read--it might only be a difference of a couple of bucks in the end. One day this week, make a peanut butter sandwich, skip going out for lunch, and buy a paperback.

Got an anniversary? Skip chocolates; fiction is sexy.

Got a non-reading friend with a birthday? Buy them a book and tell them it's high time they got over it. Or, more kindly, that you're doing it to sponsor your own future writing career. Or blame me if you must; I'm a tough old bird and I can take it.

It doesn't matter what. It doesn't have to be a literary fiction hardcover. If could be a $5.99 mass market nutrition guide, a $4.99 young reader chapter book, a Harlequin romance. Your money will still prevent returns of other books--literary fiction is usually the first to go--and will trickle down to the publishing companies, who will then be more likely to be able to afford to publish unprofitable literary fiction. Even if it's not by your favorite author or your favorite publishing house, your favorites will be indirectly affected.

It doesn't matter where. Sure, buying at the chains will help against the returns, but you can help out the publisher with your purchase no matter how you get it, even on the internet. Hint, hint: here on this site.

I'm not saying this for purely selfish reasons. I love books and authors because I know they're important to this whole planet, not the other way around.

So, scout around on this site and click the author's links to buy their books. There are some truly amazing authors to be found here. And if you need a nudge in the right direction, please get in touch with me, I can send you direct links to some unbelievably great authors and some incrediblely great books on this site.


Comments:
 
shakatoah   shakatoah wrote
on 11/27/2008 5:36:32 AM
Dwayne...thank you for your wise perspective on this situation. I'm a book fiend so have no trouble buying everyone I know books for Christmas and beyond. I hope we never get to the stage where everything we do and read is online...I'll pack up and head for them thar hills. I have to tell you you're an excellent - truly superior - writer. Your grammar's perfect for one thing and the pace you set and keep is delightful. If YOU can't make a living from writing, the rest of us are doomed for certain. I'm thoroughly impressed. :)

Michele   Michele wrote
on 11/20/2008 8:50:28 AM
The world has gone mad---one would think that with the sales from "Twilight" through the roof, it would be enough to maintain for a few days a month. When my mother was terminally ill, she ordered 2-3 books a week from Amazon. My brother couldn't fathom why she would accumulate all these heavy things, being so sick and not long for this world. So he didn't inherit them. I did. Now I have an idea what I'll do when I retire(read the entire room full) if I haven't retired already, if this layoff lasts much longer!!! In the meantime, we do piecework on freelancers' sites and be thankful for our skill that is rare in this age of the non-reader! Hang in there, Michele.

DwayneKilbourne
Business Writing
Other
writing DwayneKilbourne
dwayne@dwaynekilbourne.com
http://writing.dwaynekilbourne.com/ (writing and publishing specific)
http://www.dwaynekilbourne.com/ (general blog about business and technology)
http://www.mchpublications.com/

If you dwell on the past, you tarnish today and ignore the future! (unknown)
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A Word from the Writer
Written by Delirious Girl (DG) - http://www.redroom.com/blog/deliriousgirl/crash-flow-or-what-went-wrong-october-book-publishing#comment-14604
Published Date
11/11/2008 12:00:00 AM
Published In
RedRoom.com
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