In a summer 2008 NPR broadcast, Lynn Neary talks about the elephant in the room of the book publishing industry. It is an eye-opening episode explaining why small publishers and their authors make little to no money in the book selling business.
Many authors believe when they acquire a book contract they have made “easy street.” They think their book, retailing for $15.95 will pay them $1.59 for each copy sold. Then they start fantasizing the math: $1595 for every 100 copies sold; $15,950 for 1,000 copies; and $159,500 if they hit the big time and sell 10,000 copies!
Whoa there, pardner. It doesn’t quite work like that. Most writers are not business people and have little or no knowledge of that side of the equation.
Neary explains that during the Great Depression, many bookstores and booksellers were unable to move their titles because of the economy. As a consequence, the publishers at that time agreed to give the bookstores the right to return books which they could not sell. In the time since, the industry continues this outdated policy.
It appears as though book publishing is the only industry subject to this insane policy. Could you imagine other manufacturers dealing with this return policy from any other retail organization? Grocery store chains would love it. If they could take any spoiled meat, wilted vegetables, or sour milk and return it to the supplier for cash credit, they would incredibly increase their profit margin. They would also be able to order their stock with total abandon; they could carry anything on their shelves because if it did not sell they would simply return it.
In essence, this is what is happening in bookstores across America. It is an absurd policy which the huge publishing firms would like to see continue. They can afford returns.
According to the 2008 report, President and Chief Operating Officer of Rowman & Littlefield Publishing Jed Lyons reports the ugly truth about book sales is the rate of returns. He says booksellers return roughly one in four books as unsold. For hardback book sales last year, the rate of return was 43 percent.
These returned books must be stored in a warehouse where the same bookstores sometimes reorder the same titles. Publishing companies must pay the initial shipping, the return shipping, and then the third shipping to the bookstore again. As Mr. Lyons reflects, “Sometimes I think the only people making money in the book business these days are the truckers who are picking up the books as they go out and picking up the books as they come back.”
For the small publisher the prospect of profit is very dim. They have to pay for shipping to place a book in a brick and mortar bookstore at a discount distributors and bookstores require – 55 percent! Then, if the book does not sell, they have to pay to have the book returned and placed in storage. Indeed, with a return rate greater than 30 percent, the numbers turn into a loss.
It is time for a complete overhaul of this system. This return policy is completely absurd. A few bookstores and just about every publishing house, other than the huge companies, want to see the return policies eliminated. This would actually be healthy for the book industry. This would force bookstores into selecting titles they know would be profitable. Additionally, book buyers would benefit from lower prices.
Unfortunately the largest publishing firms who can absorb an inordinate number of book returns want to see the system kept in place as is. Those companies are fearful they will lose sales if their books are not returnable.
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© 2010 J. Clark
Very interesting post! I had no idea that is how the industry worked. Interesting perspective when you think if grocery stores had the same ability as the bookstores. I worked as a cashier in a grocery store and one of the hardest areas to manage was the produce section. You were either out of what people wanted or you had produce spoiling in the coolers because no one was buying it. Not much risk for the bookstore compared to the grocery store.