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Wednesday, November 26, 2008

Auditing Your Publisher

By Richard Curtis

Most book publishers' contracts have provisions granting authors the right to examine the books and records of their publishers under certain conditions: for example, the examination must take place on the premises of the publisher during normal business hours; no more than two audits may be conducted in any given year; an audit must be commenced within a reasonable time after the issuance of the royalty statement in question; the records on any given book shall not be examined more than once; the publisher is not required to keep records on a book for more than a certain period of time, etc.

Examinations of publishers' accounts are not a daily phenomenon and when they do occur, they are invariably conducted by authors with lucrative contracts. But the vast majority of authors has only the vaguest notion of what is involved in an audit. Perhaps we can rectify that problem here.

Harder to rectify is the somewhat bovine attitude on the part of many authors that their contracts are too small to merit auditing and the royalties to be liberated by an examination of a publisher's books would not be worth the cost, which can run to a thousand dollars a day or more.

These assumptions are not necessarily correct. While a publisher's profits from midlist and category books are indisputably smaller than those from bestsellers, the total profits from the former can be immense by virtue of the fact that there are so many more of them on publishers' lists than there are bestsellers. And because most bestsellers are by established big-name authors, the huge royalties they earn are usually paid in advance, giving publishers little leeway to reserve royalties, whereas publishers commonly hold at least half the royalties collected on midlist and category books for which modest advances are paid. Sometimes more than half. Sometimes, all of it.

If there is widespread suspicion that a publisher's royalty accounting practices are not completely kosher, a collective audit could be undertaken by an accounting firm or an author or agent organization, thus spreading the cost per author. Even if no impropriety is suspected, group audits can keep publishers honest by examining their accounting practices and the assumptions underlying them, such as their formulas for reserving royalties against returns.

Because your book or books similar to yours could be spotlighted by an audit, you might want to tag along with the certified public accountant for a visit to a publisher's ledgers.

Before we embark, however, let's discuss just what gives us the right to audit a publisher in the first place. As I said at the outset, many publishers grant that right in the boilerplate language of their contracts. Certainly, every author or agent negotiating a book contract should insist on an audit provision. But if it is absent from a contract through oversight or design, or if a publisher refuses to grant that right to an author, does that necessarily rule out the possibility of an audit? Not according to the attorneys and accountants I have spoken to. They maintain that any licensor (that's you)whose contract calls for royalties is entitled to examine the statements and supporting data of the licensee. Therefore, whether your contracts stipulate that right or not - indeed, even if you've been so foolish as to waive that right - your publisher cannot legally prohibit you from auditing its books. They can make it extremely difficult: they can postpone and stall, "misplace" and "lose" documents, subject your accountant to unpleasant conditions - a monastic cell with a hard chair, rickety table, and one flickering taper. But they must, ultimately, let your accountant go over the books.

Within recent memory there were some shady publishers who did that sort of thing, but happily they were driven out of business by their legitimate competitors. Today, while some publishers are frugal with their hospitality toward accountants, many shrug and say, "Come on in, we have nothing to hide."

Assuming your publisher is cooperative, the first step is for the accounting firm to make an appointment. The accountants will have examined the author's contract and all royalty statements from publication date to the present and will use these as the jumping-off point for their investigation. They will then request the printer's affidavits stating how many copies of the book were run off, along with information about damaged or destroyed copies. They will, of course, expect affidavits for all printings of the book. If there has been more than one printing, the accountants will want to know if the cover price of the book was raised.

Then the accountants will examine the records pertaining to distribution of the books, either to wholesalers or directly to independent stores or book chains. The number of copies distributed plus the number of copies left in the warehouse plus the number of copies damaged, destroyed, or given away (to reviewers etc.) should add up to the number of copies printed. If they don't, suspicion will certainly be aroused that the publisher has printed copies that have not been reported.

The next critical source of information is copies returned. In hardcover and trade paperback publishing, the books themselves are returned to the publisher for credit, and counting these, while tedious, is not as stupefying a task as counting returned mass market paperbacks, for the dimensions of hardcover and trade paper printings and distributions are nowhere near those of paperback. In paperback publishing, however, returns are usually effected simply by stripping the covers off the bound books and returning the covers to the publisher's warehouse, saving the substantial cost of shipping whole books back whence they came.

Obviously, the job of counting paperback covers, which even for a modest-sized publisher number in the hundreds of thousands each month, is impossible to do by hand. Modern paperback houses handle the problem by printing product bar codes, similar to those you see on canned and packaged goods at your grocery store, on the backs of their book covers. The stripped covers are fed through machines that read the codes and compute title, author, list price, number of copies returned, and other data.

I realize this procedure sounds primitive, but just to be sure I checked with a mass market paperback editor as I was drafting my update of the above paragraph. And this is what he wrote me:
"Yeah, stripping covers is still the usual method of mass market paperback returns. Trade paperbacks are still returned as whole copies.

There were a few accounts who tried to handle returns via what they called affidavit returns, in which they just told publishers how many copies they were 'returning' with no physical evidence at all, just their word in an affidavit, but last I heard I don't think that caught on most places.

For the most part it's still the painful procedure of stripping."
We now have all the information we need: number of copies printed, distributed, and returned. But there is still a gap between what the author feels is owed and the actual amount of royalties paid. That gap is the royalty on the number of copies the publisher has reserved against returns.

As most authors now know, publishers create such reserves in order to give credit to distributors and stores that might return copies of books in the future. The reserve is determined by the executives who run the publishing company, and while it is to be hoped that these individuals will base their judgments on experience, reasonable evaluations of market conditions, and common sense, the existence of this tempting pool of undisbursed money has a tendency to cloud executive judgment, particularly in the pressure cooker of corporate bottom-line expectations.

Here, then, is the answer to the commonly asked question, "Is it possible for print, distribution, and return figures to be falsified?" The answer is no, not without enormous difficulty, for it is neither safe nor practical to do so. In order for that to happen, the entire publishing organization - the clerks who document the printing and distribution information and tally returns, the bookkeeping and accounting departments of the publishing company, and the staffs of the printer and distributor - would have to be in on the conspiracy and sworn to secrecy. That is plainly preposterous: there simply isn't enough profit in the publishing business to make such wide-scale corruption worthwhile.

It is also completely unnecessary, because the same results are achieved by the decision of a handful of publishing officers to set reserves at an excessively high level. And it's all perfectly up-and-up from the publisher's viewpoint, because the establishment of reserves is a business judgment that may be argued but cannot be cited as fraudulent - unless one takes the position that the entire system is a license for publishers to earn interest at the expense of authors.

No, my observation is that print, distribution, and return information are not falsified, at least not in a way that could be described as deliberate and systematic. It would be closer to the truth to say that publishing bookkeeping is subject to the same goofs as the bookkeeping of any other industry. And though it may seem that the errors always fall in favor of publishers, the accountants I've spoken to state that as many fall in the authors' favor. Thanks in good measure to the consignment method of selling books, publishing bookkeeping is far, far more complex than it has to be, and that makes it a breeding ground for error.

One of the standard provisions of every audit clause in book contracts is that if errors of more than a certain amount - usually 10 percent of the sum stipulated in the publisher's royalty statement - are found by auditors, the publisher pays for the cost of the audit. Such a provision might make it tempting for authors who feel shortchanged by their publishers to hire an accountant, figuring the accountant will certainly be successful in detecting an excessive reserve against returns and get at least 10 percent of that reserve released. Thus the publisher would be required to pay for the audit, right?

Wrong. A high reserve against returns may not be considered an error. It's merely - in the publisher's eyes at least - a judgment call, a prediction or anticipation that a certain number of copies will be returned. Anybody contemplating an audit of a publisher's records should therefore be prepared not to recoup his or her accountant's fees from the publisher. Released royalties might defray or pay for the audit, but the publisher will stoutly maintain that no bookkeeping error was made.

Is there some alternative to hiring an accountant to find out whether your publisher is giving honest weight? Well, if you can prevail on your publishers to furnish you with information about the number of copies printed, distributed, and returned, you need nothing but a pencil and paper and a grade-school math education to figure out whether you have collected everything that is due you, and what the reserve against returns is. Then it's simply a matter of arguing with your publisher over the propriety of holding so much reserve money, or holding it for such a long time - which is what agents routinely do. The problem is getting that information. Some publishers state it in their statements, some do not. If not, with persistence you or your agent will be able to secure the information.

After reviewing it, however, you may feel in your bones or have other reason to believe that the figures furnished to you are incorrect, that your publisher printed or distributed more copies than he's told you, or took in fewer returns. You will then have to hire a professional accountant to examine the publisher's books, as the job is too complex and time consuming for untrained individuals. This is especially true if there is reprint, book club, foreign translation, or other subsidiary rights revenue - another very common source of bookkeeping errors among publishers but one that space prohibits me from analyzing in detail. Let's just say however that audits of foreign revenues collected by American publishers have sometimes yielded some gratifying rewards.

Some agents are able to build into book contracts provisions requiring publishers to furnish details of printing, distribution, returns, and reserves against returns in royalty statements, or copies of contracts and statements from sublicensees, such as book clubs and reprinters. For many agents and authors, however, it is futile to attempt to make publishers comply with such demands. This can only be achieved by collective action on the part of a determined, organized, and fearless cadre of professional writers or agents.

Happy hunting!


This article was originally written for Locus, The Newspaper of the Science Fiction Field. It's reprinted in Mastering the Business of Writing. Copyright © 1990 by Richard Curtis. All Rights Reserved.

Tuesday, November 25, 2008

What Makes Writing Worth Doing?

By Paula Margulies

In one of my favorite Woody Allen movies, Manhattan, there's a wonderful scene at the end of the film where the main character, Isaac, a neurotic, divorced television writer, finds himself at home on the couch, holding a tape recorder. His teenaged girlfriend, Tracy, has left him, he's blown a relationship with a woman his own age, he's lost his job and his apartment and has discovered that fears about his health were unfounded. In that final scene, alone and hopeless, he turns on the tape recorder and asks himself, "What makes life worth living?" He then answers the question, mumbling into the microphone in his hand: Groucho Marx, Willie Mays, the second movement of the Jupiter Symphony, Louis Armstrong’s recording of Potato Head Blues, Swedish movies, Sentimental Education by Flaubert, Marlon Brando and Frank Sinatra, the incredible apples and pears by Cezanne, the crabs at Sam Wo's, and, finally, he adds, "Tracy’s face." These last words hit him in a way the others don't; he gets up and, in true Woody Allen fashion, runs through the streets of Manhattan to find Tracy before she leaves for college in England.

I won't tell you what happens at the very end (I'll save that for those who haven’t seen the movie), but I love the fact that the final realization in this film comes because of an image. The picture of a young girl’s face in a man's mind summarizes her whole being for him: her sweetness, her radiance, her intelligence. It reveals these characteristics in a way that is so monumental that Isaac has to act. And off he goes, to whatever resolution the story has in store for him.

We writers deal in images. And like Isaac, we often find ourselves at a point in our writing lives where we're on the couch, alone and hopeless, wondering if we can continue to pour our hearts out on the page year after year.

Most of us have been in the situation where something that was at one time important to us - our job, our marriage, a sport, a hobby - changes, and we suddenly find ourselves asking, Why am I doing this? What's in it for me? In many marriages, this moment tends to occur after some years together (we'e all heard the warnings about the seven year itch). We reach a point where we ask ourselves why we married our spouse, why we chose to have kids. We imagine what our lives would be like if we hadn't gone down the marriage path. Or maybe we meet someone who seems like a true soul mate and wonder "what if?"

Writers often experience a similar pattern. We take some classes, win a few awards, find a good writing group, maybe even land an agent. But our first, and perhaps even our second, book doesn’t sell, so we doggedly write another one. And halfway through that next one, after maybe five or six or seven years of writing and going to classes and conferences and meetings with other writers, we ask ourselves, why are we doing this? Why spend so many hours away from our spouses, children, and friends, to slave over pages of words? Is it worth it?

And this is where our inspiration falters. Some writers stop writing. They begin to doubt themselves, they become more critical and anxious at their group meetings, or they don’t come at all – spending their creativity on inventing excuses: "I had too much work this week," "I’m not feeling well," "I have to go to an event with the kids," "I can’t find the inspiration/motivation/courage, etc." Even published writers go through times of doubt, wondering why a book hasn’t sold despite good publicity, successful book tours, and decent reviews. Why do any more book signings, they ask? Why write the next book? What makes writing worth the effort?

As in a marriage, when a writer's relationship with his/her work starts to falter, it might be time to examine the situation and get some counseling. A good conference or class can be the answer for some, providing a new way of looking at our writing, or offering new grounds for inspiration and camaraderie. Perhaps a stint at a writing residency might do the trick, providing some needed time for soul-searching and reconnecting with our creative selves.

Or maybe it's time to talk with a spouse, trusted friend, writing expert, agent, even a publicist. Anyone who’s a good listener can act as a sounding board. Have that person ask (or just ask yourself), "What makes writing worth doing?"

If you're honest, your answers might surprise you: maybe it's worth it because you love creating a world all your own from your own imagination; maybe it's the exhilaration you feel when you find that perfect word that illustrates exactly what you’re trying to say; maybe it's the admiration you receive from your friends, your family, your readers; maybe it's the friendships you've formed with other writers like yourself; maybe it's the voices of the characters you hear in your head, begging you to bring them to life on the page; maybe it's an image of a young girl's face. You don’t know what that image means, but you feel driven to write about it, to find out why it haunts you, to discover how understanding it might impact your life.

Listen carefully to your answers. If you're lucky, you just might discover an idea, a thought or, possibly, an image so powerful that it gets you up off the couch and running to create your next scene.

Oh, and for Isaac, I would have added one more thing that makes life worth living: writing.
_____________
Paula Margulies is a book publicity and promotions expert in San Diego, California. You can reach her at paula@paulamargulies.com, or visit her website at www.paulamargulies.com.

Wednesday, November 19, 2008

The Book Stops Here - All About Bookstore Buyers

By Richard Curtis

Bookstore buyers are the last link in the chain connecting author to reader. Or perhaps we should say they are last obstacle between them, for as we track the life of a book from the time the author turns it in, we may well be put in mind of the upstream battle of a salmon against rapids, waterfalls, submerged rocks and trees, and a host of predators. Many perish before they reach the quiet headwaters, and most that make it are doomed as well. A book must struggle against all manner of challenges: the hazards of editorial judgment, the treacheries of corporate politics, the uncertainties of the economy, a host of human failings, and a congeries of unlucky or providential events.

The final, and perhaps most brutal, stretch in the obstacle course occurs when the publisher's sales representatives attempt to interest bookstore buyers in their forthcoming lists. These hardy men and women will have attended their publishers' sales conference, where scheduled books are introduced to them by the firms' editorial staffs. As we've seen, editors presenting their books accompany their pitches with pertinent information and sales aids: the author's track record, advertising and promotional plans, news of movie or magazine or foreign deals, anything, in short, that makes the book stand out from its partners on the publisher's list, or from the competition on the lists of other publishers. Then, bearing advance reading copies, catalogues, covers or dust jackets, sales information, press kits, and novelty items such as buttons or bookmarks, the sales people make appointments to visit the buyers in their territories.

Before the advent of bookstore chains, these sales reps (or "travelers," as they were then known) visited individual bookshops and pitched their lists to each store owner or purchasing manager. The dialogue between buyer and sales rep reflected their joint interest in matching consumer reading tastes with the current and past lists of titles offered by each publisher. Although bookstore chains have been around for a long time, until a decade or two ago these were not a significant factor in buying patterns, and the relationship between sales rep and store buyer was a highly personal one emphasizing local values.

The rise of the chains has revolutionized every aspect of book merchandising, not the least of which is that special bond between publisher and bookseller. The impact of this change cannot possibly be understated. The buying power of the chains is so highly concentrated and leveraged that even a modest order per store, multiplied by the number of stores in any given chain, can easily make the difference between success or failure for a given book; a larger order can put a book on the bestseller list or extend its stay on it for a long time. Indeed, some chains have their own bestseller lists on which publishers heavily rely in assessing sales activity of their books. To a disturbingly increasing degree, chain store buyers are being consulted by publishers about whether or not to acquire certain types of books, placing the buyer in effect on the editorial boards of some publishers.

The same power that can exalt a book can cast it down if the chain store buyers withhold their blessing. Thus, publishers are concentrating an ever-increasing portion of their time, energy, human and financial resources to currying favor with the chains at the expense of the independent bookstore. Not unexpectedly, this has resulted in the near-demise of the old-fashioned bookshop. These beloved emporia, with their casual atmosphere and library-like hush, with the visual and tactile delights of wonderful and interesting books everywhere the eye settles, with the varied stock reflecting the eclectic tastes of both owner and clientele - these are yielding one by one to the march of progress represented by clean, tidy, bland, efficient, convenient chain store branches with their homogenized stock, distinctly unbookish sales staffs, and computerized record-keeping and purchasing programs.

Individually owned shops cannot hope to compete with the discounted prices offered on frontlist books by the chains, nor can their low-volume turnover generate the kind of capital necessary to meet the rents in high-traffic urban and suburban shopping centers. A while back, an association of small booksellers in northern California litigated with a big paperback publisher alleging that the publisher offered preferential discounts to book chains, a practice that the small stores maintained was widespread through the publishing industry. The store owners simply did not have the funds to prosecute their suit to the bitter end and were compelled at length to settle, leaving the issue unresolved but guaranteeing that preferential discounting in favor of the chains will continue to drive nails into the coffins of the small bookstores.

Although they differ from one another in buying policies and patterns, discounting practices, and many other respects, fundamentally all chains function in much the same way. Their buying staffs receive sales representatives of publishers or publishing groups and listen to their spiels about forthcoming titles. The buyers then consult their records and sales data, review the information and material furnished by the publisher, and yes, they even read the books. After taking everything into consideration, the buyers put in their orders: some in large quantity, some in small. And sometimes, they don't buy any quantity at all.

How is business transacted in a typical buying office? Well, for one thing, you may safely believe that the publishers' reps talk fast. Given the large size of many publishers' lists, sales people have precious little time to give speeches. It has been estimated that they have between thirty and sixty seconds per title to get their message across. I suppose that if you divided their publisher's list precisely by the number of minutes granted to the rep for this interview, that estimate would be accurate. In fact, it doesn't quite work that way.

First of all, there are some kinds of books that require little or no salesmanship: certain backlist books, for example. When the stock of Dr. Spock's Baby and Child Care or The Random House Dictionary falls below a certain number, it is usually reordered automatically. The latest novel in a long-running series may not call for extensive discussion. Some other types of books, such as most first novels, will seldom fetch large orders even if the sales rep talks himself blue in the face, unless it's something on the order of The Hunt for Red October, the great first novel that set Tom Clancy on the road to bestsellerdom. That is because the buying policies of the chain, or the parameters of the computer's purchasing program (more about this presently) simply prohibit a large order for first novels, and the experienced sales rep has learned to save his breath for pitching books for which there is more latitude (and potential for commissions). "Don't waste my time in the 'gimmes,' " one buyer is fond of saying. "Just tell me about your featured books." He is referring to such "product" as celebrity biographies, new books by bestselling authors, timely or controversial nonfiction books, and other books that the publisher believes will have "legs." On these the sales rep may soliloquize to his heart's content: he will invariably find an attentive listener.

What are the things that chain store buyers look and listen for when sales reps go into their routines? Bear in mind that salesmen are salesmen the world over, and whatever they are hawking there is usually a percentage of blarney mingled with the truth. Astute buyers have learned to detect it, and because they are powerful and have at their disposal the best information-gathering capability this side of FBI headquarters, wise sales reps seldom bluff, bullshit, or soft-pedal the truth. "Don't tell me my market," another buyer told me he frequently says to sales reps.

The thing buyers most want to hear is, how much is the publisher getting behind the big books on its next list? A sales rep will boast of enormous "in-house" enthusiasm for a book, may show the buyer a fancy bound proof specially printed to impress the book trade, may inundate the buyer with tie-in gimmicks of all sorts, may tender to the buyer an invitation to publication party in a swank restaurant. Few of these inducements turn the buyer's head as much as a commitment by a publisher to advertising, publicity, and promotion. In particular, as one buyer reported to me, bookstore people are most impressed by plans for co-op advertising. As opposed to advertising that carries only the name of a book's publisher, co-op ads show the book's cover along with the name of the store: "Available at all XYZ Bookstores," such an ad might read. The cost of the ad is borne by both publisher and bookstore, and the publisher's commitment in hard dollars guarantees that the company will be getting strongly behind its product.

One of the most unsettling aspects of chain store buying practices is the use of computers to make decisions. As in so many other applications, the computer is both an invaluable tool and a frightening menace. Programs like Nielsen's BookScan provide the book-buying office with highly detailed information about sales patterns on a book-by-book, author-by-author, store-by-store, region-by-region, publisher-by-publisher, basis, and the data are available instantly. Track records of previous books by any given author may be summoned by the touch of a finger or two on a computer keyboard, providing the buyer with all the input he needs to make his decision.

Some chains depend more heavily on computer data than others, and in many instances purchase orders are rigidly programmed: "If we bought 10,000 copies of that author's last book, we cannot buy more than 10 percent more copies of his next one, so put us down for 11,000." It is here that the greatest danger to literature may lie, for obviously this slavish devotion to ordering programs simply does not take into account such critical factors as a buyer's common sense, his instincts, and his personal enthusiasms. Most of all, it does not take into account the quality of the book in question, for even if an author's book is a quantum leap in quality over its predecessor, the buyer who has not read it - or even one who has - may be compelled by his own computer program to order the same number he would if the book were no better than the last.

It was comforting for me to learn, as I prepared this chapter, that there are still buyers, even in chain store offices, who care about books and authors and maintain a personal rapport both with publishers and consumers. The best buyers recognize the computer for the tool it is, but understand that a time comes when you have to walk away from the computer screen and go out among the customers.

Spencer Gale, an executive with National Book Network, a leading distributor, told me he believes that the vital information harvested by computers must be balanced by a humanistic approach to book ordering. "Computers don't read books and computers don't buy them," he told me. Also, good buyers look beyond their own predilections: "You are not buying for your taste alone," Gale expressed it. And a buyer for another store told me she conducts informal but highly accurate market surveys by showing new women's novels to her mother and highly touted young adult books to her teenage daughter.

Nevertheless, one gets the uneasy feeling that the noose around the throats of all who love literature is tightening with each step toward the consolidation and computerization of the publishing industry. The intimacy between the publishing and bookstore businesses is now all but visible and palpable. It may legitimately be wondered what use sales reps will be in the future if there is no longer any distance for the "traveler" to travel. A phone call, a lunch date, a stroll across town, and the fate of a book could be sealed even before its acquisition by a publisher.

This article was originally written for Locus, The Newspaper of the Science Fiction Field. It's reprinted in Mastering the Business of Writing. Copyright © 1990 by Richard Curtis. All Rights Reserved.
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Wednesday, November 12, 2008

All About Book Clubs

By Richard Curtis

Book clubs are such solid fixtures in the lives of authors, agents, and publishers that we take them for granted, like enormous monuments that we no longer notice on our way to work every day. How impoverished our literary environmen

t would be without book clubs can easily be grasped when you realize that millions of Americans subscribe to them. And because changes in pricing, reader tastes, distribution, marketing, and other trends have drawn new attention to the functions of book clubs, this is a particularly good time to examine this phenomenon.

Book clubs (and I'm referring to commercial clubs, not the informal discussion groups that have sprung up in living rooms over the last decade) were an outgrowth of attempts to reach a larger segment of the reading population than was then being served by bookstores. Experiments like department store book clubs (there were Macy's, Gimbel's, and Bloomingdale's clubs among others) and tie-ins of cheap editions of books with the sale of products (a tobacco company included miniature volumes of Shakespeare plays in its cigarette packs) inspired an enterprising merchandiser named Harry Scherman to found the Book-of-the-Month Club in 1926. He perceived that an enormous potential audience, particularly in rural areas, had inadequate access to bookstores in towns and cities. Mail order, which worked so successfully for many other products purveyed to rural people, ought to work with books, too, Scherman reasoned. And he was right.

Scherman, however, put a twist on this concept that made it a dramatic departure from the Sears, Roebuck approach. It's called the "negative option," meaning that unless members expressly indicate that they do not want the latest selection, the club will assume they do want it and will send it to them. Scherman's insight into human nature was almost diabolically shrewd. Perhaps he didn't trust that members would buy books simply because they were good, and he counted on such human foibles as laziness, guilt, and confusion to make members default on their obligation to return their cards in time to prevent clubs from shipping selections to them.

Whatever the motives of Scherman and subsequent book club entrepreneurs, the clubs caught on fast and hard, sweeping the country and, in the process, revealing some serious flaws in the way that books in this country were (and still are!) distributed and promoted. One publisher observed that "the clubs advertised books extensively and nationally, sold them regularly to people who had previously been only occasional book buyers and, most importantly, fostered the habit of regular reading," according to John Tebbel in his excellent book about American publishing, Between Covers. Tebbel cites book clubs aimed at business people, engineers and other professsionsl as particularly effective in reaching audiences that conventional bookstore marketing simply could not touch.

Not unexpectedly, the creation of the clubs provoked a great outcry among retail bookstore owners, who felt gravely threatened by them, particularly when a competitive club, the Literary Guild, added the wrinkle of offering books for prices below retail. Many retailers accused publishers who dealt with clubs of collaborating with the enemy. Harder to comprehend was the opposition by publishers, who after all did stand to profit from licenses to clubs. Their contention, however, was that the clubs represented an element of crass mercantilism and cynical exploitation of the hallowed spirit of literature (publishers believed the oddest things in those days!). The Bookman asserted that book club members were "too feeble-minded, too lazy, or too busy to make their own choices." But book clubs were an idea whose time had come, and after consolidating their gains during the Great Depression of the 1930s (reading being one of the few affordable pleasures of that grim era), they became the institution we revere today.

With few exceptions, the basic idea concocted by Scherman has not changed. A lot of other things have, however, forcing clubs to take measures to keep up with changing times, tastes, and conditions.

One of these is the shrinking of rural America, making bookstores accessible to people in all but the remotest reaches of the nation. Fortunately for the clubs, accessibility of bookstores is not by any means the most important factor for potential book buyers. Indeed, urban members constitute a large portion of the clubs' memberships. A far more important element is price. Book clubs offer discounts on the list prices of books, starting at around 10 percent, and additionally offer free bonus books plus sign-up inducements such as free sets of books.

As long as a wide gap existed between bookstore and book club prices for books, clubs could hope to continue doing a healthy business. The critical test came when the paperback revolution took hold, making paperback originals and reprints available for prices far below those offered by clubs to their members. But the clubs came through the test unbowed, revealing how solidly the convenience factor figured in the thinking of book buyers.

Most recently, the clubs found themselves under intensive fire from their old enemies the bookstores following the explosive expansion of such chains as Barnes & Noble, especially into suburban and rural areas, strip malls and the like. Not only did these chains reach deeply into territories that had been big profit targets for book clubs, but they started discounting books at or below the prices offered by the clubs. And when you added postage and handling charges to the prices members paid for book club selections, the allure of the stores became very compelling. Fortunately for the clubs, the stores could not sustain the narrow profit margins generated by "deep discounting," and although discounts are still offered on certain books by chain stores, the threat to the clubs from that source seems to have been averted.

It would appear that no matter what weapons the enemies of book clubs throw at them, the clubs survive because they possess one advantage the stores cannot overcome: selectivity. For readers too busy or uncertain to sort out the welter of new books, clubs proffer the recommendations of a panel of experts who have screened the candidates and distilled the very best. Furthermore, many book clubs cater to specialized tastes. Book buyers interested in subjects ranging from dance to warfare, mysteries to science fiction, nostalgia to travel, sailing to nursing, business to computers can satisfy their predilections by joining clubs aimed at those specific interests.

Most book clubs make their selections in pretty much the same way. Publishers submit books at an early stage, in manuscript or proofs, accompanied by promotional material and any other information about book and author that the publisher may feel will make the book more attractive to club members. (On occasion, a book will be chosen by a club after publication.) The submission is assigned by the club's editorial board to a reader, hopefully one who will give it an informed and sympathetic reading. Recommended works are then circulated to the rest of the editorial committee and are discussed, rated, and voted on. The club then negotiates deals with publishers on the books they wish to acquire. The club either guarantees to purchase a quantity of copies of the publisher's edition or, if the club has its own printing facility, licenses the right to publish its own edition. In either case, most clubs pay an advance against a royalty, though some smaller clubs pay a flat fee for a fixed, one-time printing. After the deal is struck, the clubs solicit orders from their membership. Except for the clubs that do their own printing, most clubs earn their profit from the difference between the cost of copies purchased from publishers and the price received from subscribers.

Book clubs are a major source of book sales, the largest clubs reaching hundreds of thousands of subscribers.

For the biggest literary stars the advances paid by book clubs can be mind-boggling, such as the $1.75 million reportedly paid by the Literary Guild for James Michener's The Covenant after a bidding war with the Book-of-the-Month Club (the two clubs merged, so it's not likely you will see future bidding wars on such a grand scale.). Most of the time, like any other business enterprise book clubs will offer as little as they can get away with, in many cases below $10,000. Often, however, publishers can sell the same book to more than one club. Royalties usually range from 5 to 10 percent of the book club's price.

The money paid to publishers by book clubs is, with almost no exceptions, split equally between publisher and author, and in a great many cases the club income makes the difference between profit and loss for a publisher on a given book. Indeed, a former head of Book-of-the-Month Club told a gathering of literary agents that she considers book clubs the saviors of midlist books. It can certainly be argued that in an era of increasing attention to frontlist books, book clubs keep a great many books in print far longer than publishers themselves are able to do.

Although the key interface with book clubs is the book publisher, agents often cultivate book club executives in order to give them early notice of publication deals on books that might be hot prospects for the clubs. Some time ago, my agency performed the equivalent of passing a camel through the eye of a needle when we submitted an unsold manuscript directly to the Reader's Digest Book Club and secured a commitment from the Club to buy the book if we could find a publisher for it. We had failed up to then to sell this lovely family-type story that seemed to be too tame for the editors who had read it. But it was right up the RDBC's alley, and armed with a five-figure book club offer, we easily attracted a publisher for the book. But this was a rare event and we just happened to have the right book in the right place at the right time.

It's hard to imagine authors failing to be delighted by book club sales, but there have been a few. Willa Cather's arm had to be twisted to accept book club selection of Shadows on the Rock because she considered it crass exploitation of her work (authors had the oddest ideas in those days, too!). More recently, a number of authors, notably Stephen King, have objected to book club acquisition of their books on the grounds that club sales cut into sales of hardcover and even of paperback editions of the same book, losing them both readers and money.

Their reasoning is by no means without merit. Take a big-name author such as King whose book is published by a hardcover-paperback company that pays him, we can assume, a full royalty on both editions of his book. Suppose the hardcover edition sells for $25 and the paperback for $7. One thousand copies of the hardcover edition might bring in about $3,000 in royalties. One thousand copies of the paperback edition might bring in about $700. Now, suppose one thousand copies of the book club edition are sold at a 20 percent discount to subscribers, or $20. The royalty on those thousand copies will be about $1,300. But that money must be split fifty-fifty with the author's publisher, netting the author $650. Thus the book club's revenues are about 25 percent of what the author will get for the same number of copies sold in hardcover, and even a little lower than the royalties for the same number of paperback copies sold. Although it can be argued that the same thousand people who might buy the book through a book club wouldn't necessarily buy it in stores if it weren't carried by the club, you can nevertheless see how authors like King might view sales of their works to book clubs as losing propositions. The war between bookstores and book clubs still smolders, sixty years after the opening volley.

Willa Cather and Stephen King notwithstanding, a phone call from your agent or editor informing you that your book has been selected by a club is cause for celebration, and of course it looks great on your resumé!


This article was originally written for Locus, The Newspaper of the Science Fiction Field. It's reprinted in Mastering the Business of Writing. Copyright © 1990 by Richard Curtis. All Rights Reserved.
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Monday, November 10, 2008

Is Self-Publishing for You? Only if you want to be assured that you will make money from your book

By Anthony S. Policastro

I found this fascinating article today:

I wrote a book. It was published by a subsidiary of one of the world’s leading publishers. It sold 20,000 copies at $24.95 each, a total market value of almost $500,000. Yet my publisher judged it a failure - and it only netted me $2,311. Yes, you read that right: $2,311. On a book that my publisher made $500,000 (ok only $497,689 after paying the author), I, the author, only earned $2,311. And no, I’m not bitter and twisted. Just determined to expose the flaws of the publishing industry to anyone who aspires to write a book they hope to sell. Here are my tips to make money on your work:Is Self-Publishing for You? Only if you want to be assured that you will make money from your book, Nov 2008You should read the whole article.

Wednesday, November 5, 2008

Brand Names

By Richard Curtis

When I entered the publishing business the paperback revolution was in full swing, and among the innovations introduced at the time was the insertion of ads in paperbacks. Although a number of products were tried out, the ones that stood out most vividly were cigarettes. There was debate on both Publishers' Row and Madison Avenue about propriety and economics, and I don't recall that I cared much either way; it was fine with me if people wanted to run ads in books, and fine with me if they didn't. The ads didn't inspire me to buy the product, but few ads do anyway. Nor did I find them a desecration of literature, mainly because the books they ran in were often desecrations of literature to begin with. Still, some authors did not like it, and others worried that the insertion of an ad for Marlboros in The Attack of the Hydrangea People today could lead to one for Desenex Foot Powder in War and Peace tomorrow.
I doubt if such ethical considerations would have prevailed if the economics of carrying advertising in books were sound, but they apparently were not. In addition, the susceptibility of book buyers to such ads was not terribly high. Publishers and advertisers might, given enough time, have overcome these problems had not, the story goes, some publisher run some cigarette ads in a book about the dangers of smoking (the story may be apocryphal, but it's too good to resist). The incident pointed up the dire possibilities, and so it came to pass that many authors and agents demanded specific language in their contracts stipulating that no ads would be run in their books, except ads for other books published by the publisher) without their express consent.

Ads in books are not very cost-effective ways of conveying a sales message. If the average distribution of a run-of-the-mill paperback original is 50,000 copies (it's often less), of which perhaps half will be returned, you're talking about 25,000 exposures of the ad, maybe a few more if the book is circulated beyond the original purchasers. That's not a great many exposures compared to the hundreds of thousands or millions an advertiser can get in national magazines, and its a pittance compared to the exposure of ads on the Internet and the effectiveness of ads on network television. But, you say, don't advertisers pay less to run ads in books than in magazines or on television to compensate for the difference in exposures? They certainly do; so much less, in fact, as to make it scarcely worthwhile for the publisher to sell the space.

There are other problems as well. Despite the commercialization of the publishing industry many publishers do have compunctions about the ethics of commingling ads with the texts of books, and although they may have few reservations about publishing books depicting human depravity in all its hideous glory, they draw the line at disposable razors and smokeless tobacco. You figure it out. Another problem is consumer resistance to ads in books. While most buyers of literature don't think twice about ads that appear in magazines, they find the same ads discomfiting in books. This may relate to the disposability of magazines; books are to keep, and book buyers may feel that their cherished possessions are contaminated by ads.

If we accept the truism that where there's a will there's a way, then we may be able to find creative ways around the problem. First, however, authors have to acknowledge that advertising in books does not necessarily spell the death of civilization as we have known it. Perhaps they would have an easier time doing so if they thought there was something in it for themselves.

What's in it for publishers, we all know: money. Advertising defrays costs and enhances profits, worthy goals for any business. But authors do not benefit from advertising revenue, nor do I think many of them feel entitled to do so. But surely, if they consider how much money is paid to contributing authors by such ad-rich publications as the New Yorker or Vanity Fair, it should be clear to them that there is a distinct relationship. Without meaning to sound overly cynical, it's easier to imagine authors accepting ads in their books for disposable razors and smokeless tobacco if they're paid advances twice the size of those they're now getting. Maybe the time has come, then, for authors to rethink their hostility to the notion.

It may well be that, for the reasons I've given, it's an unfeasible one. Nevertheless, it does raise a related issue having to do with the relationship between book publishing and other commercial enterprises. You might call it brand-name sponsorship of books, and though our industry is awakening to its potential, there's still a lot of fuzzy thinking in this area.

Our society is heavily dependent on brand names for the selection of consumer goods, and the consumer of books is no different from the consumer of soap powder. Publishers are confronted by a serious problem in this respect, however, because when it comes to selecting books, the "brand name" of the publisher means nothing to the consumer. Oh sure, the average book buyer is probably more familiar with the names of Random House, Doubleday, and Simon & Schuster than with firms like Beacon Press or Chelsea House, but he or she does not prefer Random House books over Beacon Press ones. The book buyer has no brand name loyalty, and little brand name recognition: I warrant 90 percent of all readers cannot tell you the name of the publisher of the book they are currently reading. Readers who loved a recent Putnam book could not care less about Putnam books in general, and if the author moved to Viking his readers would buy his Viking books as avidly as they bought his Putnam ones.

Readers, as I say, are as brand-name conscious as anybody else, but for them the brand names are favorite authors. But I'm constantly surprised at how little advantage publishers have taken of the availability of brand-name companies to sponsor books - sponsor them, that is, the way they sponsor television programs. The Procter and Gambles and General Foods of the world are loaded with money and spend stupendous sums on advertising and promotion. The sums necessary to back a book and put it on the bestseller list are pathetically low compared to what must be spent to achieve consumer acceptance of some new product or model: we're talking about perhaps a hundred thousand dollars or a little more, the cost of one or two magazine ads for soap products or automobiles or cigarettes. For another thing, these companies are in a position to buy books - lots of them, for use as premiums given away or sold at high discount to purchasers of their products.

Many writers who are not names may have wonderful ideas for books and superb expertise to bring to them. They will probably not get very far, however, because good ideas and extensive knowledge are unfortunately not enough to interest publishers in commissioning books. I cannot tell you how many worthy proposals are turned down annually by agents and publishers because the authors lack a "platform" or "credentials." When I see such proposals, I often suggest that the author try to link up with a brand-name company in that field and try to interest the firm in sponsoring his book. The same principle might wed brand-name sponsors to whole lines of books. Cosmetic or fragrance manufacturers could be persuaded to back lines of romance novels, for example.

There is gold mine potential in this area known as licensing, and, because it means more work for authors (and possibly lucrative deals for them if authors and their agents play their cards right), far more attention ought to be paid to bringing sponsoring companies onto the publishing scene.
Some purists will attack this notion as another form of subsidy publishing, and that, unquestionably, is what it is. But an industry subsidized by Marlboro cigarettes, Kellogg's Corn Flakes, and Alpo dog food is still preferable to the present system subsidized by authors.

Photo courtesy of Kate Sherrill, who spotted the ad in a 1972 paperback version of Agatha Cristie title.

This article was originally written for Locus, The Newspaper of the Science Fiction Field. It's reprinted in Mastering the Business of Writing. Copyright © 1990 by Richard Curtis. All Rights Reserved.

Monday, November 3, 2008

Your Dream can come True

By Anthony S. Policastro

With all the doom and gloom with the economy and Wall Street, I wanted to share some light and hope with all the struggling writers out there who dream of becoming a published author one day.

I offer this excerpt from the 2005 edition of U-Publish.com: How 'U' Can Compete with the Giants of Book Publishing by Dan Poynter and Danny O. Snow. The 2008 edition is available from Lulu.com

Why Self-Publish?

Self-publishing (also called independent publishing or alternative publishing) offers many benefits to writers: more control of content, a greater share of profits, faster publication, and the potential to tap lucrative “non-traditional” markets beyond bookstores and libraries.

The benefits of more control and more money are self-evident. The benefits of exploiting non-traditional markets are less obvious, but equally important.

In a 1996 study, the American Booksellers Association estimated that there are nearly ten times more outlets for books than bookstores per se. Books are now sold almost everywhere: in gift shops, supermarkets, airports, truck stops, doctors' offices, and most importantly in uncounted numbers of stores with specialized product lines that are compatible with a particular book’s subject. No kidding: we’ve seen books about fishing selling like hotcakes off a rickety wooden pier on a remote stretch of the intercoastal waterway, miles from the nearest town... and farther from the nearest bookstore!

Traditional publishing concerns may supply some of these outlets as a sideline, but sell the majority of their books through major chain bookstores and libraries.

The terms for mainstream book trade sales are less than ideal for the publisher, conventional or independent. Traditional booksellers expect big discounts, a long time to pay, and the right to return unsold books to for a full refund on a routine basis. On the other hand, non-traditional outlets are more numerous, often pay more, pay faster, and return fewer (if any) unsold books. While conventional publishers move most of their inventory through mainstream channels, the savvy independent publisher can usually find better outlets.

To illustrate, suppose you have written a book about a relatively narrow subject like organic fertilizers… how many casual bookstore customers are interested in this subject? Probably very few. But now imagine the customers of a tree nursery or gardening supply center: nearly all of them are potential readers!

Traditional publishers generally don’t even try to sell books in outlets like these, but self-publishers can take advantage of specialty markets that are usually neglected by conventional publishers.

Professionals in the publishing industry tend to look down on self-published books, citing frequent writing errors, amateurish layouts and cover designs, or other problems that are rarely seen in books from major publishers. Frankly, this attitude is sometimes justified by books from vanity presses -- BUT there is absolutely no reason why a self-published book can’t meet professional standards. To illustrate, below are just a handful of books that were originally self-published:

  • What Color is Your Parachute? by Richard Nelson Bolles: originally published by the author, it has enjoyed more than 22 editions, 5 million copies and 288 weeks on the bestseller lists. Now the “evergreen” title of respected publisher Ten Speed Press.

  • In Search of Excellence by Tom Peters: more than 25,000 copies were sold directly to consumers in its first year. Then it was sold to Warner, which sold 10 million more.

  • Real Peace by Richard M. Nixon.

  • The Celestine Prophecy by James Redfield: his manuscript made the rounds of the mainstream houses, and then he decided to publish it himself. He started by selling copies out of the trunk of his Honda -- more than 100,000 of them. He subsequently sold out to Warner for $800,000. The #1 bestseller in 1996, it has now sold at least 5 million copies, probably more.

  • The One-Minute Manager by Ken Blanchard and Spencer Johnson: sold more than 20,000 copies locally before they sold out to Morrow. It has sold more than 12 million copies since 1982 and been translated in 25 languages.

  • A Time to Kill by John Grisham.

  • The Joy of Cooking by Irma Rombauer: this classic was self-published in 1931 as a project of the First Unitarian Women’s Alliance in St. Louis. Today Scribner sells more than 100,000 copies each year.

    Other well-known self-publishers include: William Blake, Stephen Crane, e.e. cummings, Deepak Chopra, Benjamin Franklin, Zane Grey, James Joyce, Rudyard Kipling, D.H. Lawrence, Thomas Paine, Edgar Allen Poe, Ezra Pound, Carl Sandburg, George Bernard Shaw, Upton Sinclair, Gertrude Stein, Henry David Thoreau, Mark Twain, Walt Whitman and Virginia Woolf… to name just a few.

    So don’t tell us that a self-published book can't meet (or beat) the standards of conventional publishers. If you have the passion to write about a subject you love, the time and skills to prepare a quality book for publication, the confidence to take some financial risk, and most of all the determination to promote and market it proactively, you can self-publish successfully.

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