Wednesday, December 17, 2008

To Return or not To Return

There have been many recent calls for reform in the publishing industry and one currently popular suggestion is to eliminate the consignment system. (The system where booksellers can return any unsold books back to the publishers for credit.) In fact Borders has agreed to a deal with one imprint (Harper Studio) to accept books with no right of return, but they are buying the books at a deep, deep discount. (And I'm quite sure this discount will be pushed down to the writers and decrease their royalties. In fact, my quick google search reminded me this is the same imprint that announced it was no longer paying advances to authors...)

I'm not enough of an industry insider to pretend I can predict what will happen if the consignment system is eliminated in publishing... But I do know business, and I do think it might not be as great for authors and agents and editors as many seem to think it will be. So, I'd like to present the contrarian case. Ahem. **Maureen clears her throat and braces for rotten tomatoes.**

Yes, the consignment system is antiquated. It's true that these days very few products are still sold on consignment. But the ones that are (music, books, art, designer fashion) are in areas where the items are not only discretionary (luxuries) they're in areas where it's more difficult to predict what consumers will buy and therefore the seller (publisher in this case) agrees to accept a lot of the risk along with the retailer (book store). (It might interest people to know that many high end items in department stores, e.g. designer clothes and bags and shoes, are also often on consignment or even further, the designer is actually renting a small space in the store and giving the store a cut of the sales price when/if items are sold. Seamless to the consumer, but the retailer is NOT taking all the risk that Dolce and Gabanna will be a big hit with their new line, or that all those pairs of thousand dollar Manolos will sell.)

Yes, consignment hurts publishers and authors. (Because they're taking most of the risk.) From the publishers' stand point, the consignment system makes cash flow planning tough, if not impossible, because they never know when books are going to come sailing back in the door for credit. From what I've read, this hit a record in October with returns far exceeding new orders and caused a huge panic.

And trickling down, the consignment system sucks for authors, because the publishers have all the power in that relationship, and to guard against paying authors royalties on books that then get returned, they maximize reserves on returns and make royalty statements difficult to understand to hide what they're doing. And take as long, as they possibly can justify, to pay authors their royalties.

But... I fear that bookstores will change A LOT if this system goes. Will it be better for authors? I'm not so sure.

If I were a bookseller, and I couldn't return the books I ordered to sit on my shelves, I'd be WAY more conservative about how many and which books I carried. I'd buy fewer titles and fewer copies of those fewer titles. And I'd stick mostly to the already proven best-selling authors, and cook books, and celebrity tell-alls, and picture books with kittens and puppies.

Bookstores, where one can browse and discover new authors, might become a thing of the past. (But maybe few readers do this anyway? Maybe most readers only ever buy books they find on the front tables?)

This conservatism will trickle down. If consignment goes, publishers will get way more conservative about the choices they make. (As if they weren't conservative enough already!) If aspiring authors are finding it hard to get a publisher to take a risk on them now, imagine if the publishers aren't sure whether ANY bookstores will stock a debut author's book once they've spent money on an advance, artwork,design, editing, printing, etc.. Right now, the big houses can be fairly assured that the big chains (at least) will take a few copies of every new title.

But even though I've been arguing the contrarian case here, clearly the current system's broken. Cash flow aside, it's a horrible environmental problem, with tons of books being published and shipped that are subsequently trashed.

I think until print-on-demand (printed and bound at the book stores) and/or digital books are more viable and popular formats than they are now... authors (especially debut and mid-list authors) might have a rude awakening if the industry gets rid of the consignment system. (And I really do worry about copyright infringement in the digital world. I think it will be worse for authors than musicians. We can't make money writing (or even reading) our books live at big stadium concerts or in bars, now can we? Many otherwise-honest people I know don't balk at illegal downloads of music and movies and TV shows. Why would books be any different? But that's veering off into a whole other topic. So I'll save that for another day.)

I know I'm going against the grain here... What do you think? Should the return system in publishing be dumped?


Amy Ruttan said...

I have nothing intelligent to say on this matter, but I think if the return system for bookstores was dumped then you are absolutely right that bookstores would only stock their sure fire sellers. This would/could be the death of the smaller Indy stores.

I'm thinking of kitten and puppies now. :)

Molly O'Keefe said...

It's going to hemogonize (sp?) everything. Every bookstore will offer the same things because that's all publishers will be offering and all editors will be buying. As romance writers, however, we'll do better than most.

There will be fewer and fwer of those great surprises every year because print runs will shrink down to about nothing.

On the other end of things - the environment aspect is really horrific. So much waste.

It will be interesting to see what the HArper imprint does -- I'm sure everyone is watching very carefully.

Sinead M said...

consignment is a really nice deal for the bookstores, it certainly makes it easier to buy a broader selection.
But deeper discounts may mean they'll make more money in the end.
What may end up happening, is it might be a two tier system. Some are returnable, some are night. I think that's the case between hardcover and paperback...

Stephanie Doyle said...

I'm going Pollyanna on this one. I think it will change things - but for the better and I'm going to qualifiy that with EVENTUALLY.

Right now we have the problems with publishers only trying to sell break out bestsellers. Maybe this gets worse at first... but ultimately I think that will change.

A person gets into the business of selling books because they want to make a living off of what they love...BOOKS. They'll get just as frustrated as any reader when what we have to read shrinks to Nora Roberts, Stephen King, John Grisham etc. And that's it.

I think what we'll see happen is for debut authors they will see smaller advances and smaller print runs BUT booksellers might say okay - give me 20,50,100 copies I'll give it a try. And maybe they try more than one author at this level - rather than having to buy that ONE author the publisher has decided to "get behind."

A good book that takes off will go back for reprints. I read that it's much easier to go back for another print run than it is to deal with the returns of 1000s.

I really don't see the difference in saying - we'll buy 1000 copies and get "credit" for the 900 we don't sell (the author still isn't going to see any royalties from this) vs. we'll buy 100 for less and take a risk.

Again - I do think it means publishers will have to reconsider "good deals" on new authors. And I have to say I'm not opposed to this. I think big advances can hurt authors - if they don't sell through - as much as help them.

If your book is good, has that something that makes people want to read it - you will eventually make $$ on it.

I also think the POD and digital downloads will become the next thing. As much as people say... but I love the feel of a book in my hand... the world changes.

And I agree that that could lead to copyright problems - but as Maureen said that's a rant for a different day.


Maureen McGowan said...

Stephanie, I hope you're right... but I fear there will be more of the booksellers only buying the ones the publisher gets behind. In fact, the publishers might only contract books they're willing to "get behind".

As to this point: "I really don't see the difference in saying - we'll buy 1000 copies and get "credit" for the 900 we don't sell (the author still isn't going to see any royalties from this) vs. we'll buy 100 for less and take a risk."

It think the difference for the author is whether readers can find the books. It's already hard for readers to find books that don't get co-op advertising etc. Removing the right of return might mean that they only buy the books that would've gotten co-op.

I hope I'm wrong. Plus, I don't necessarily think I'm right. I just feel like some of the articles I've read on this topic are only looking at it from the "I want that reserve against returns line off my royalty statement" point of view, without considering the big picture.

I think Sinead could be right about the two tier thing. Literary fiction, for example, might stay on some kind of a return basis.

But why does Walmart or Costco have the right of return on paperback bestsellers they're already buying at a deep discount? They already aren't carrying variety. So if there's a place to introduce this first, I'd say it's that part of the market.

(And I might be wrong that they do have the right of return, like book stores do.)

Does anyone know?

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