Hardcover book market goes soft
A customer browses a large selection of books at a New York City bookstore.
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Kai Ryssdal: BookExpo America starts today. It's the largest annual book convention in this country.
This year, it's here in Los Angeles, where publishers, literary agents and retailers are all going to be trolling the floor looking for hits.
There'll be some tension out there, too, because the book business is facing some real challenges as Marketplace's Jill Barshay reports.
Jill Barshay: Lonnette Parks Sisler is a cookbook author. She didn't see her first royalty check until eight months after her cookbook hit the bookstore shelves.
Lonnette Parks Sisler: I was surprised that it took that long because I was so excited at the beginning of the contract. I went to bed; it was hard for me to sleep. I was thinking I was going to be rich the next day.
There's a reason Parks Sisler had to wait so long: A book publisher ships thousands of books to bookstores, but it doesn't get paid for the merchandise right away. In fact, bookstores can wait 90 days or so to settle up.
Parks Sisler's publisher is Rudy Shur who owns SquareOne Publishers outside of New York City. He's started to notice a curious thing lately: Bookstores are returning books just before the 90 days are up and the bill is due.
Rudy Shur: And then a week or two later they reorder the books so then they have another 90, 120, 150 days to pay you. So from a publisher's standpoint, it's very frustrating.
Frustrating because it can be months before a publisher sees cash for the books he's shipped. Even if the publisher is lucky enough to get paid, it might have to give a big chunk of it back after six or eight months. That's when bookstores return unsold books for good and expect a refund. In the case of Parks Sisler's cookbook, SquareOne had to take back a quarter of the entire print run -- 2,500 copies.
Robert Love: These are returns, two skids of returns that actually arrived here today.
That's Robert Love. Square One's business manager. He says bookstores are ordering tons of books, more than they can possibly sell. That's because the stores aren't really competing with each other. Instead, they're competing with the Internet. They're afraid that if a customer can't find a title on a shelf, he'll go home and order the book online. So to keep the stores happy, publishers are saddled with the cost of printing too many books and having to take them back.
Love says publishers have themselves to blame.
Love: There was a limited amount of shelf space so a publisher had to be willing to take back old books back, back-list books that weren't selling, in order to get his front-list books on the shelf and in front of the consumer.
Larger publishing houses are even more stretched. John Rose advises publishers at the Boston Consulting Group.
John Rose: Most companies are looking at flat growth and the need to manage costs very effectively which is changing in some ways the nature of the business.
For years, publishers have been cutting personnel. There are now fewer editors who've less time to nurture authors and improve manuscripts and smaller marketing staffs who have to spend the bulk of their resources promoting the big best sellers. That means the books that don't take off right away rarely come to the general public's attention. This is one reason why half of all new books fail.
Rose says the biggest problem publishers face is from new electronic book readers that are starting to sell, like Amazon's Kindle.
Rose: The crazy thing about the book industry is that most of the people in the book industry think about books.
In other words, Rose says the threat to book publishing isn't about returns and refunds of printed paper. It's that new technology can bypass publishing companies altogether. Rose says publishers should think about a world where any writer can publish a book cheaply online and any reader can download it freely.
In New York, I'm Jill Barshay for Marketplace.