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Tuesday, May 27, 2008

Off to Book Expo 2008 in Los Angeles

I had hoped to post another segment on the Unappealing Byproduct series, but will not be able to do so before leaving for Book Expo American 2008 on Thursday. Click here for what Book Expo is all about. If you are attending, stop by our booth, No. 1211.

Tens of thousands of book industry professionals--librarians, booksellers, authors, media, and so on--together with general book lovers of all stripes and flavors descend on the Los Angeles Convention Center for several days of meetings, rights deals, publicity, learning, freebies, and more. For the uninitiated, Book Expo with its thousands of displays and mountains of new books is . . . overwhelming. So can be the eating and drinking that follow each long day.

This year, in addition to selling foreign, paperback, and audio rights, we will be proudly featuring our Fall 2008 author and title Once a Marine: An Iraq Tank Commander's Inspirational Memoir of Combat, Courage, and Recovery, by Gunny Sgt. Nicholas Popaditch (with Mike Steere). Nick (or Gunny Pop) will be signing hundreds of copies of his book in galley form, meeting with media, and recording interviews.

"Gunny Pop (now known widely as "The Cigar Marine"--Google it) graced the covers of newspapers around the world when an AP photographer captured him in his tank smoking a cigar while protecting the square where Saddam Hussein's statue tumbled into the ash bin of history. On his second tour to Iraq (three if you count the 1991 Gulf War) Nick was critically wounded with an RPG to the head during the second battle of Fallujah in 2004. His is an amazing story, and Once a Marine (compared by some advance readers to Dalton Trumbo's masterful Johnny Got His Gun) captures it magnificently.

We look forward to providing more information on this title very soon.


Wednesday, May 21, 2008

A Radical Shift in the Publishing World

And none too soon.

Ironically, it dovetails nicely with my recent posts about how screwed up the traditional publishing business model really is.

HarperCollins recently announced that it is launching a new book imprint, and the model for it is rather radical. The publisher plans to focus sales through the Internet more than usual, will no longer accept returns from booksellers, will no longer pay sizeable advances to authors, and will not participate in paying co-op fees for placement programs. (Those books you see face out, on end caps, or on special tables are often there only because publishers paid money to put them there. Most people do not know this.)

This only makes sense and how the model fares will be interesting to watch, though it will take a few years to figure it all out. Still, entering this Brave New World might be akin to some far sighted seaman in, say, 1912, remembering to take binoculars into the crow's nest in time to spot any telltale water lapping at the bottom of an iceberg.

Read the full article in the Wall Street Journal here.

Wednesday, May 14, 2008

An Unappealing Byproduct, Part 3 (Author Impact)

As I explained in my first two blog posts in this series, the advances in technology, coupled with a change in buying habits, has impacted publishers in any number of ways (some good, some not so good.) During this flood tide of change (and partially as a result of it), the distribution-payment schedule for traditional trade sales has evolved into a seriously flawed model. Review those posts here and here.

By way of recall: a book with a $30.00 retail price nets each publisher (give or take a quarter or so), $9.75. That means publishers must pay everything--authors, printers, storage, taxes, shipping, design, formatting, editing, utilities, wages, insurance, office supplies, travel (I could keep going) out of the $9.75. "That's Impossible!" one person announced to me recently. He is not far from wrong.

This impacts authors in many ways, but the main result has been a significant change in the structure of royalty payments. The impact on authors can be positive and negative, depending upon the publisher the author selects, and the author himself.

Traditionally, authors were paid a royalty based upon the retail price of the book. If the book was $30.00, and the royalty was 10%, the author received $3.00 for each book sold, whether the publisher received the full price or something less than full retail. Recall that before the advent of the Internet, Amazon, eBay, etc., a large percentage of books were sold at full price. But buying habits have changed, and so few books are sold for full retail unless there is a value-added incentive (early shipment, signed copies, first or publisher edition as opposed to a cheaper book club printing, and so forth).

With some publishers, especially those who handle their own distribution (and so do not have to fork over 35%-50% in distribution fees), authors are still paid a royalty based upon the retail price. However, many (most?) of these publishers pay little or no attention to individual authors and titles, do not plan a book tour (even the large houses plan few tours), arrange media for only a select handful of dozens or even hundreds of titles, and then rapidly remainder their remaining inventory after the initial push into the book trade is over (just 90-180 days). Authors who have spent years working on a book suddenly find they cannot get a meaningful response from their publisher, little or no marketing support, and their labor of love is quickly thrown into the remainder bin at Walmart or online and sold for $3.99. Being paid off the full retail suddenly means very little when a very large percentage of the print run is remaindered.

The flawed distribution and payment model, coupled with the influences of the Internet, make it virtually impossible for small- and medium-sized houses to pay authors off the full retail. Some still do, of course, and we have on occasion depending upon the title and how and where we believe we can sell it. But for many authors--especially niche writers--this traditional arrangement is no longer as viable as it once was.

So what does this mean for authors? It means that, in most cases, they will be paid less for trade sales because there simply is not enough of a margin to allow otherwise. It has nothing to do with a publisher wanting a larger slice of the pie. Rather, it is about being able to continue publishing books. Understanding this, and then altering behavior and viewpoint accordingly, will be the subject of my next post, followed by the effect on end users: buyers.


Friday, May 2, 2008

An Unappealing Byproduct, Part 2

As I noted in part one of this series of posts, the confluence of technology and buying habits is affecting the industry from top to bottom. This post explores pricing structures, and how it affects many publishers, authors, and in the end, buyers.

Many publishers (usually the big guys) manage their own distribution. Many more (especially the smaller and niche publishers) do not, and so contract with a distributor to handle some or all of their access to the market (think general book trade--Amazon, Barnes and Noble, Borders, and so forth). Our distributor is Casemate Publishing. They know the military and general history market inside and out, and handle our distribution into the book trade only. We manage and oversee all other sales.

Technology and Dollars. In the not-so-distant past, a sizeable chunk of any print run sold at full price, or darn near retail. The advent of big box stores, the internet--eBay, Half.com, Amazon--and varying technologies has changed that dramatically--for the better and for the worse. Let me explain.

Let's say we publish a book with a suggested retail price of $30.00. If we sell it at full cost, fine. If we sell it to a book dealer (bypassing the distributor), they go from 25% - 50% off retail. Again, acceptable discounts with few or no returns. But usually the largest percentage of a print run goes into the book trade via the distributor. The division is rather ugly.

The original $30.00 price is cleaved in half because the bulk of books leave the warehouse at 50 percent off. That leaves us with $15.00. The distributor has to take a slice of the revenue, and depending upon your distributor, it can be anywhere from 25% to 55% of the $15.00. (Yes, you read that right.) I am not going to reveal our contractual details, but let's take a middle ground and use 35%. So, $15.00 less 35% ($5.25) leaves us with $9.75 from a $30.00 title.

Book wholesalers who pick up from the distributor (Baker and Taylor, Ingram, Barnes and Nobles, Amazon, etc.) pay months after the shipment, and we receive our check four months plus 15 days AFTER the month of shipment. In other words, if 100 copies of a $30.00 book ship in January 2008, the funds ($975.00) are paid to us in the fifth month thereafter: JUNE.

It gets worse.

These same wholesalers and stores allow patrons (that would be you) to read them in-store, eat over them, spill coffee on them, tear or fold pages, bump the corners, etc. and then put them down so they can go find a used copy on eBay or a cheaper copy on Amazon. These copies (and others--some that never get out of cartons) can be returned for FULL CREDIT to whittle down the outstanding debt to the distributor. So using our example, when June comes around, and the stores return 50 copies, that is immeediately deducted from our check, which cuts the payment from $975 in half. These same stores can the very next day reorder new books, and the cycle starts again.

What does this mean? It means that publishers must pay everything--authors, printers, storages, taxes, shipping, design, formatting, editing, utilities, wages, etc. out of the $9.75 we receive for each $30.00 book.

This model is seriously flawed. Publishers (and by extention the authors--more on that in the next post) shoulder the debt. Put another way, Savas Beatie is carrying the paper--making us creditors for booksellers. We do not rely upon the book trade for our survival and dedicate significant energy into marketing outside the book trade. Success, therefore, requires the right product and very active, and understanding, authors.

I will continue this post by addressing the impact on authors and a follow-up post on how this impacts you, the reader.