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kaigourevised to remove confusing terminology that had some folks balking.
Dear Author recent post covered a lot, but missed a crucial detail. In talking about the publishing industry's byzantine and neolithic (wow, there's a combination) business model, and especially in comparisons to netflix, must address LIZARDS.
For awhile, the net was all agog over the notion of a 'long tail': at the onset of a new item's introduction, the sales should be pretty high for X amount of time, and then those sales taper off. The longer that tapering lasts, the longer the 'tail' of the sales. If, as [name I can't even recall right this minute and should damnit] first noted, you do the math, you might eventually figure out that a long tail, if stretched long enough, could end up equal to (or at least rivaling?) the original burst of, uhm, roundbody sales.
Pretend you sell 100 units every week in the first six weeks. After that, just to pull random numbers, let's say it drops by 1/2 each week until you get down to the actual tail, where the minimum would be (duh) 1 unit per week. So that's:
week1-6 - 600
week7 - 50
week8 - 25
week9 - 12
week10 - 6
week11 - 3
week12 - 1
Most booksellers take this into consideration this when re-ordering, if not quite as a concrete thing. It's more like, we ordered X books a week for 6 weeks, and all X books sold, then we only sold 1/2X in week 7, so we didn't reorder, and it took another seven weeks to sell the rest. If the bookseller reorders (big if), it'll probably be for an amount roughly 1/4X, at best -- assuming the bookseller has the extra cash to spend on a book that may sit there taking up shelf-space and sell (if at all) really really slowly.
Exceptions? Hell, yeah. I recall for xmas I special-ordered the Faeries book (yes, the one by Froud). My business partner didn't realize I'd ordered already, and ordered it as well. Oh, noes! We put out the second book. It sold in an hour. Uhm. We had four requests for more. I ordered five. They all sold. I ordered six. What the hell? In the space of three weeks, we sold something like 18 copies. The book had been out for, oh, sixteen years already? Not really what I'd consider a best seller, and it wasn't cheap, either: but it was a consistent seller. That's what I mean by longtail in the sense of "yeah, so we only sell one a week, so the number is really low, but we always sell one a week, so we'll keep ordering it."
Now, granted, plenty of people are aware that booksellers can return books. This is true. This is also patently stupid, to think that's part of a solid business plan. (I'm going to ignore Borders and all the rumors I hear about their pathetic business practices at this point, and get to that later in this post.)
If you're wondering: YES, I did do this kind of math when writing a business plan for the bookstore, with the attendant question of "how many bookshelves can we a, fit into the space, and b, actually afford?" [I look back now and think, MAN, if only IKEA had been open in our state at the time, we could've had three times as many shelves for the same amt of money, sigh.]
There are a lot of misunderstandings about bookstores as businesses, though I think in part that's because it's such a romanticized business. It practically occupies its own space in our culture, a business unto itself. Look at all the times you see bookstores in media and books: the mystery where the detective owns a bookstore, the book & coffee model (existing long before Borders and B/N hooked up with such), even the ubiquitous wiccan/pagan bookstore with the crystal-wearing owner. It's romantic. It's also still a business.
So let's find a location. Hrm. A single commercial space about the size of my second shop would be about 20' wide by 25' long. That's 500 square feet. If rent is $24/p/foot, that means the monthly rent will be $1000. (Commercial rentals are often set at annual amount per square foot, so you divide the rent by 12 to get the monthly amount. Usually. Not always. But if the rent seems really high, that might be what's going on.)
At 20' by 25', that's probably going to come to 6 rows of shelves (three aisles), with constraints thrown in that you can't have the shelves too close together (remember, people in wheelchairs also read books!). Adding in the back wall, and rounding to an easy number, let's say in a 500 square foot space, you end up with 150' feet of running shelf footprint. Then multiply that by the number of levels per bookshelf, let's say 6, and you get 900 feet of running shelf footage. Let's throw in a low shelf here and there, maybe in front of the counter or along the front wall, and round up to 1000 running feet of books.
(Our business plan, sadly -- lessons learned! -- was so tight on such things that we had maybe a quarter as many shelves as we could've squeezed into the space. We made up the difference with sidelines: tshirts, tarot cards, jewelry, etc. But the bottom line is that every inch must be earning money, one way or another.)
A general rule of thumb is going to be that you can fit from twenty-four books to six books a foot, so saying twelve books a foot isn't perfect but a decent average, plus it's easier math. That means the bookstore can shelf roughly 12,000 books on its 1,000' feet of shelves.
NOTE: keep in mind that these numbers are rough averages, just ballpark figures so you can see what I mean by proportions. That is, all but maybe two shelves of my bookstore were non-fiction. I just didn't sell a lot of fiction, for whatever reason, so I didn't stock it. And most of the alternative and small press and university press non-fiction were not door-stop tomes, either, so for me 1" was actually a bit on the large size -- I'd say we probably averaged a little bit below that. Then again, we didn't have a lot of paperback-size books; most were quality...ugh, or whatever the medium-sized one is called. My brain just fizzled. You know the size I mean, I'm sure: nicer binding, larger cover, but still paperback. Personally, I found they sold the best: people didn't feel like their nonfiction was pulp (ala paperback) but they didn't feel like they were walking out with a bag of bricks, either. POINT IS, these numbers would vary for any store, depending on location, investment, niche, size, and so on.
NOW comes the really annoying part, if you ask me. In the past twenty years for reasons I still can't fathom, book prices have steadily climbed. I haven't seen any significant drop-off in sales (not counting the recent plunge), and in fact book sales overall have hiked, even if you don't count the major blockbusters like Rowling. So I'm not sure why what was a $5 paperback in 1992 could become nearly $10 in 2007, or how hardbacks that I sold for maybe $15-$20 are now $25-$35, but I HAVE MY SUSPICIONS. (Of course.) But for the sake of argument, let's say your bookstore averages out to 1" wide books that go for $20, averaging together nonfiction, fiction, hardback, and paperback. Plus, easier math.
Of that $20, if you are just Joe Schmoe Bookstore, you're going to pay $12 (60%) to the distributor for the book, and when you sell, you'll get to keep $8 (40%). This means to completely fill every shelf in your store, you're going to be shelling out $144,000; your sales receipts will say $240,000 (gross) but your actual net (profit-loss) will be $96,000.
That, of course, is assuming you turn over every single book in the store, regularly, all the time. Ha. Hahahah AHAHAHAHAHA NOT GOING TO HAPPEN. But it's a nice dream. Some books sell faster, some sell slower, some don't sell at all even though you wish they'd go to a good home. Meanwhile, you still have rent ($1000 monthly), utilities, any wages for yourself or employees (assuming you wrote that into the business plan; we didn't, and BOY do I regret that oversight the most because working for nothing is HARD on the checkbook and the psyche), and there's business licenses and taxes and other office-like things you'll need (paper, printer ink, random upgrades to computer, staples, pens, and don't forget the BAGS you'll need for people who buy lots at once and should be bronzed for their awesomeness).
So let's say that rent + stuff + wages comes to a total monthly overhead of $3,500. You'll have to net $3,500 just to break even, which means that in fact you will need to sell $8,750. That means your break-even point, roughly, is about 440 books. (Unless you end up selling nothing but $10 paperbacks, in which case you're screwed because those are never $20 a pop. Ugh.)
That's just your break-even point. You basically just made back all the money you've spent in overhead, and you have nothing in the bank. You're zeroed. If you want to actually turn a profit, you'll need to at least double that, sell 800 books, let's say, and then you end up with a net of about $6,400, of which $3,500 goes to overhead. Now with that money you just made in profit... You do not get a raise, you do not redecorate, you do not go buy new shoes. YOU BUY MORE BOOKS.
Now back up and look at the numbers again. There are approximately 12,000 titles in the bookstore. Let's pretend you've got a crazy-popular place and can sell 1,000 titles a month. (That's 33 books a day, if you're wondering. Some days that seemed impossible, but I also had a great deal less overhead and my rent was far cheaper, too. Those were two major factors in my store's ability to manage monthly profits from early on.)
- $3,500 overhead [fixed costs]
- $12,000 wholesale [variable costs]
+ $20,000 sales receipts [variable income]
--------------------
+ $4,500 profit
Thing is, this doesn't tell you at-a-glance whether or not you're really getting the most for your expenses. That requires one more step, which is to compare how much is going out (all costs) versus how much is staying (actual net profit). There's a simpler way to do this but one that's harder to explain if you're not a savvy accountant (which I'm not), but this was the rule of thumb my business partner (son of a CPA!) taught me:
($3,500 + $12,000) ↔ $4,500
Treat it as a proportion, and reduce until you get $1 value on the biggest side. Since right now that's expenses, that means you divide profit by expenses, like so:
$4,500 ÷ $15,500 = .29 = 29¢ profit for every $1 spent.
Give or take a few pennies, you may have spent less than you earned, overall, but in fact you're making only a quarter for every dollar you're spending. Lovely. In the long run, this ain't much of a profit.
[Before anyone asks, sales tax is NOT a part of this equation. Never is. That's money that's added on top of the book's price, does not stay with the store, and usually gets sent off monthly or quarterly -- depending on earnings -- to the state. For smaller businesses, it's quarterly, which is handy if you can drop that sales tax into an account that earns you interest in the meantime, but since it comes out to pennies on the $100 dollars, it's not worth chasing. You do have to show that you're not touching that cash, though, because it's not yours and therefore never part of your calculations.]
Now you know why I say that bookstores are run on so much of a tight budget that it's almost ridiculous, sometimes -- granted, this isn't nearly as tight as, say, the pharmaceutical industry (1-2%) or the restaurant industry (5% if really good and really lucky) -- although those two examples are ones in which selling in massive massive numbers are what keep you afloat. Books, not so much; sometimes, like during holidays, you can sell five coffee-table books and see profits balloon in ways you never see when you're selling $10 and $12 quality-sized paperbacks. One $50 book, woo!
Ahem, sorry, got a little excited there.
Flaws of the business aside, this example's running profit isn't terribly bad, as the company's still afloat and able to pay its bills and expand a little. It's probably not too bad, in a realistic sense. What does this mean, though? It means that, on average, of the 12,000 objects in the store, figure you'll be selling from 1/10th (1,200) to 1/12th (1,000) books to stay in this range. Let's be really expansive and say you're selling 1/10th, and it still remains pretty true to the business model mentioned in the Dear Author post, which explains the Pareto model: 20% of the titles generate 80% of the publishing houses’ profits.
In a bookstore version, it's more like "10% of the stock may generate 100% of the profits." Why? Because you never know what people are going to buy or want or like or hate, is why. You have to have a broad selection and hope that at least 10% of it appeals enough for people to buy it in enough quantity so you can pay your bills. (Reminder: the rough-10% here is based on the proportion of X copies total versus Y copies to cover costs, which is generally about 10% but could go up, could go down, so I'm going with 10% mostly because it's pretty close to the numbers from my own shop.)
Now for an additional kink, based on my own experience. When we opened, we a) didn't have that many bookshelves (hahahahaUGH), and b) we didn't have a massive influx of cash. We had enough, but not a massive amount, but then, we were only trying to fill a 500 sq foot space, not a 3,000 foot Borders behemoth, either. At the time, there was a mainstream bookseller in town, who focused on the NY Times bestseller list -- that's pretty much what they carried. There was a B Daltons or a Walden's, something like that, at the mall, and a massive three-floor used bookstore.
What we realized was this: let's say, at $30,000 to spend on books, that got us 2,500 BOOKS. Total number of copies of everything put together. We knew already we didn't want to compete with the bookstore up the street, since we didn't want to carry bestsellers but small press & university press books (with a strong focus, it ended up, on alternative-everything as we called it). But Waldens carried a lot of the same topics as well, and they always had five or six copies of a book on the shelf. All the big bookstores did.
We just plain didn't have the money to do that. If we had, we would have ended up with 2,500 books but only 500 titles -- which, as should now be obvious from the intro-accounting stuff above -- cuts seriously into one's ability to corner that 10% needed to get the minimum overhead paid every month. More titles = potential more sales BUT fewer of same title = potential LOSS of sale when two people want the same thing.
In the end, we opted to get one of each. I'd done the research, and the Big Boxes of the time (Crown, Borders, Waldens, Daltons, etc) all insisted over and over that no one buys the last two books. Never! People are used to seeing six, seven, ten books on a shelf, they'd never-ever buy the second-to-last, for some strange retail-psyche reason, and they'd certainly never only buy the one book, on the grounds that it was the one that had been flipped through a bazillion times by other people.
We figured, if from the very start, there's only one of each book, then people KNOW, duh, that they're not buying "the last beaten copy" but in fact "the only copy". Plus, it meant we could carry 2,500 titles instead of one-fifth that, which expanded our potential selection. (I spent HOURS arguing this with our investor, who SWORE we should "do what they do" and have 5 titles on the shelf and it was MADNESS for me to try and make the money "stretch farther" when that was OBVIOUSLY business-suicide. Then we turned around and nearly broke even the first year and completely screwed-up his intended tax shelter. Gee, whoops? HAH.)
YES. I do think it amusing that two years after closing the store, I wandered into a Barnes & Nobles to find there was only one of every book in the nonfiction, and that trend was starting to take over the fiction, as well. HAHAHAHA you big boxes, small bookstores came up with that first! we trained the readers, not you!
However, the big boxes -- Borders, Barnes & Nobles, even Amazon, now -- had something we little stores didn't have and never would. They had purchasing power. The majority of sales in those major stores are on a national level, although individual stores have leeway to increase/decrease titles, add others, per their local sales. But when BN-et-al says to Daw or Baen or whomever, "we'd like to pre-order this title," they're not talking twenty copies, or even two hundred. They're talking potentially in the thousands, even millions if you're a really lucky author or your last name is Rowling. And that, in turn, means that BN can say, "and you know what? We don't want to pay no stinking 60% wholesale cost. Hm, no, we think 40% sounds good for us. Don't like it? Well, we can find some other publisher to buy a million pre-ordered copies from. See ya!"
(This is the real reason I really, truly, totally loathe the near-monopoly of the major booksellers. For that previous paragraph, and the one to follow.)
When these books hit the shelves -- and keeping in mind that the book industry is predicated on this 60/40 split -- that means BN-et-al can drop the price by 10%, 20%, etc, and all they've really done is adjust their retail price to be artificially 40% compared to the wholesale price. That is, I pay $8 and sell the book for $12; for the same book, they pay $6 and sell for $10, but we're both making only a 40% profit -- but from the reader's point of view, hey, this book's brand-new and it's already discounted to $10, and that's way better than $12 over there. Woo!
And there isn't a damn thing an independent bookstore can do about it, because even the really big independent bookstores (of which there are still a few) will never have the buying power of someone who can thumb-up or -down on a million freaking copies at once.
Add in the quiet complaints here and there in the industry about the BN & Borders buyers, who have been known to strike out a cover or title and send it back for 'something else' -- well, that's all good and well, a buyer does have a fair idea of what covers sell, and covers do sell books. But to have that much authority in one person's hands really, really, really pisses me off, as a reader, and as a former bookseller.
I mean, yeah, so Walmart can make or break book deals and music sales, now, as well, but do I really ever want to be stuck reading only those books suitable for sale at Walmart? I THINK NOT. Nor do I want to be stuck trying to assess a book based on covers that Walmart deemed suitable, oh CRIPES noooooo.
Frankly, if B&N and Borders crashed and splintered into a freaking bazillion independent, loosely-affiliated but separately owned bookstores, I would be very very pleased. It would be a GOOD thing for the industry, and it might even propel the publishers into some kind of innovation (which is mostly what the Dear Author post is complaining about the lack of). But right now, I don't see the publishers having quite so much leeway to innovate as might be assumed from an outsider's point of view -- because they're hamstrung by certain laws that went into effect in the 90s, and by the past two decades' development of the three-headed devil-dog at the gates of retail: Walmart, Borders, and Barnes & Nobles. (One might say four-headed, if we include Amazon.)
Someone's got to cut off at least two of those heads, and trim the other two down to size, before the publishing industry (I think) is going to have as much room as it'll need to really start innovating. Or maybe another way to put it would be -- for the more reluctant, or stick-in-the-mud publishers -- that seeing Cerberus get cut down to size might scare the pants off them into figuring out a way to make sure they're not NEXT.
As for Borders, part of their business model is something called churning, which is an option I never freaking got from anyone because I bloody well wasn't big enough. Near the top, I mentioned being able to return books. You can. It's usually got to be within a certain amount of time -- I think 60-90 days got you everything back, and up to 6 months you could return but with a 10% loss for 'restocking'. The problem is that somewhere in the mid-90s, the [tax] laws were changed about 'value of goods' and 'property taxes' for businesses.
Pre-change, (when I was chatting with the folks for my weekly phone-ordering call YES WE HAD NO FAX OKAY!?), a distributor might have, say, $100,000 worth of books in its warehouse. Physical books, sitting on the shelves, waiting to be sent out or having been returned, waiting for someone else to order them. These books just sat there, if no one wanted them, and the distributor didn't pay attention to them. (This is the Backlist; it's the Dead Book Place; it's where Rare Book searchers would go to find that out-of-print book you really really want, for a small fee.)
Then things changed, and "unsold goods" were made "valuable property" and therefore something that could be taxed. In other words, what had been a bunch of books sitting on warehouse shelves gathering dust now suddenly became $100,000 worth of taxable items. Suddenly a distributor was going to be losing a LOT of money if it let those books just sit there -- but (oh, this burns me) if they destroyed the books, then there's nothing to pay taxes on, AND they can take a loss on what didn't sell.
NOTE: someone pointed out elsewhere that this existed for awhile. Could be. All I know is that the policy we were told, per our contracts with distributors, was based on the assumption that we could return and they would restock and the books were available for turn-around. (There was a limitation, though; I seem to recall you couldn't return a book after 6 months, or maybe a little longer? Hrmmm.) Shortly after we closed, I was chatting with another bookstore owner who told me the policies had changed: now returns weren't nearly as generous, due to this tax-on-items thing. As I asked elsewhere, was this because the industry had been under the radar previously? Or because it was in a loophole? Or just not being enforced? I dunno. I only know the policy changed somewhere in mid-90s and that this change in tax law was pointed to as the reason.
Which, naturally, got turned over to the bookstores. Eh, if you're buying a million copies of a title and you're also making 50% to 60% profit margin and have the leeway to make less and sell more, then the less-considered part of this is that you can also rearrange. Books that don't sell at this store, you can transfer to another, where they are selling, and thus you can avoid massive loss-returns. Or, if you do have to return, you're already buying so much that a more generous return agreement? Probably already in the cards.
Not so for small businesses. To have a book on the shelves for three months, miss the deadline, and return it, means you just paid -- using above example numbers -- $2 to basically 'house' the books. That is, you paid $12 to purchase it, and got back $10 when you returned it. UNTIL that law (or its belated effects) went into effect, at which point a lot of terms changed to say that now you couldn't return a book at ALL if you didn't return it fast enough.
To refer to the post's originally-intended topic, this would be chopping off the lizard's tail right at the base. WHOMP. Gone. If the book doesn't sell fast, then you've got to get rid of it fast, or you're stuck with it. Smaller bookstores must eat the risk or do stock/returns at a much much faster rate than before. So if you've got lazy readers (like me) who wander into the bookstore 5, 6 months after a book came out... it's not on the shelf. Amazon becomes my only choice. OR, you don't order at all, and readers learn to not even bother checking, and go straight to internet-ordering, whatever the source.
(Gee, thanks, big box bookstores, for stacking the house of cards so it'll all fall on the little guys! Yeah, so that's usual in business but this is above and beyond what I'd call usual on any kind of a sustainable level.)
But wait! There's more! The usual terms with distributors are 1 week, 30 days, 60 days, and 90 days, depending on your credit history with them. (We started with pay-on-arrival, and by six months we were at pay-in-30-days, and one distributor had us at pay-in-60 by the time we closed, verrrry sweet.)
What does that mean? Oh, easy: that's when you get to churn.
Order $1000 worth of books. Note the payment says, "since you are fancy massive bookstore with lots of buying power, you have 90 days to pay from the date the order was delivered in full". However, you still only have 60 days before you can return without a restocking fee & tax-surcharge per that stupid warehousing-books law. So on day 59, let's say you return $500 worth of books, and get $500 credit from the distributor for books you have not even paid for yet.
That's churning.
That's what Borders did like crazy; it's like a microcosm of the financial market's madness gone absolutely bonkers. On top of that, Borders pulled a really fast one that I find supremely annoying, which effectively dicked over every small press and university press out there: they did not return to the original distributor but to Baker & Taylor. Ohhhhh, that burns me.
[There are three massive distributors who do most of the business: Ingrams, Baker & Taylor, and ARA. If you've ever flown in a commercial plane, you've probably dealt with ARA food, since ARA also distributes food for universities, many businesses, and a number of airlines. They're much more all-over-the-place; their impact on publishing is in the area of magazines. Ingrams and B&T are focused on books. There may be other biggies, but those two book-distributors are pretty much the very top monsters.]
This is what I mean: Borders orders $1000 from, say, University of Virginia press. UVA's press is also distributed through Baker & Taylor, and I know from experience that I couldn't always remember which distributor had sent which book. (It's rarely marked on the sales tag.) So I'd think, I'm pretty sure I got this from Baker & Taylor. They'd call a week later saying, "we didn't sell you this book, BUT we do have a deal with that particular publisher, so we'll give you credit anyway, return the book to them, and call it even." In other words, the $10 they gave me, they'd get from the original publisher upon receipt of the book. Alley-samey, really.
[In one case, I accidentally sent a return to New Leaf, a really awesome small-press distributor that had the most awesome wonderful people working for them who saved my hide many many a time -- and they called up and said, "this wasn't from us, so we should return it, but three of us think it looks cool, so we're going to give you a credit for it and call it even so we can read it!" Kinda like buying... but not. Sort of. Heh.]
Now, thing is about small presses: if you order a lot of books from them (which Borders would, of course), it's going to be hard for them to fill the full order, sometimes. They're called "small" for a reason. This is where I explain why I italicized the terms -- because in those rare cases where a book was sold out, and I had ordered more than one copy, this made the order incomplete. I'd get a note saying I didn't have to pay for the order until it was filled, although my terms were usually more like "you have to pay for what you did get, but not for what you didn't get". Borders had/has much more generous terms: if they order 500 copies and only get 100, they don't pay for those 100 until the other 400 have come in.
Add in the churn, and you can see the madness going on here.
Borders is busy ordering, doesn't have to pay, AND is returning books to Baker & Taylor instead of to the original, small, publisher-distributors. So the publisher/distributor is sending the rest of the order while the first half is being RETURNED FOR CREDIT, and Borders can then use that credit to get books through Baker & Taylor, who carries a helluva lot more than just that one small press. It's like, "I ordered 500 copies of the Book of Vacuum Cleaner Hoses, only got 250 so far, then immediately returned those 250 not to Hose Press but to Baker & Taylor, got $5,000 credit, and turned around to use that to purchase from Baker & Taylor 500 copies of Dan Brown's latest tripe, on which I've now made $5,000 on top of the money I didn't actually even pay yet."
[ETA: I just found copy of the actual suit, which names Baker & Taylor, not Ingrams; previous reports I'd found had named Ingrams, for some reason.]
Notice that Borders has not paid out a single penny yet. Basically, they ordered something, returned it elsewhere, and used that return to buy something else which was sold at a profit -- and meanwhile, the original distributor/publisher has not even been paid a penny.
On behalf of the small presses and university presses who kept me in profits for three years and always produced such awesome books, when Borders goes under I WILL BE DANCING ON ITS GRAVE.
Yes. It will be a big black hole in the bookstore industry, and I expect a lot of authors will suffer because those are lost sales. But on the other hand, authors who do make money off that kind of shenanigan, well, there's a part of me that thinks: it's kinda like people who flipped houses and made boatloads and now their buyers are in houses that cost too much and are worth too little. It's making money... at the cost of devastating other parts of the system. It's not self-supporting. It's self-defeating, eventually.
And the destruction of one like Borders, maybe a hard thing in the short term, but in the long term, I would hope it teaches a few lessons about the innovation that's really needed. Not just in POD or in ebooks or in using Amazon's lessons in a brickfront, or even in what's wrong/right with the publishing industry itself -- but in how to better use today's developing technology to make sure that small businesses can become, and remain, competitive with cannibalistic monsters like Borders and prevent such slaughter from happening again.
I had meant to talk about the lizard-tail, but I'll do that next -- it just seemed like (or maybe it's my bias) that unless folks understand how the bookstore industry nuts & bolts things, then it wouldn't make sense how to go about lizarding things. Although that's possibly also because I don't have more than a general clue how publishing works, but I do have a grasp on how bookstores work, so I'm going to naturally approach any solutions from the POV of whether it would be help/harm to bookstores.
goto part two
Dear Author recent post covered a lot, but missed a crucial detail. In talking about the publishing industry's byzantine and neolithic (wow, there's a combination) business model, and especially in comparisons to netflix, must address LIZARDS.
For awhile, the net was all agog over the notion of a 'long tail': at the onset of a new item's introduction, the sales should be pretty high for X amount of time, and then those sales taper off. The longer that tapering lasts, the longer the 'tail' of the sales. If, as [name I can't even recall right this minute and should damnit] first noted, you do the math, you might eventually figure out that a long tail, if stretched long enough, could end up equal to (or at least rivaling?) the original burst of, uhm, roundbody sales.
Pretend you sell 100 units every week in the first six weeks. After that, just to pull random numbers, let's say it drops by 1/2 each week until you get down to the actual tail, where the minimum would be (duh) 1 unit per week. So that's:
week1-6 - 600
week7 - 50
week8 - 25
week9 - 12
week10 - 6
week11 - 3
week12 - 1
Most booksellers take this into consideration this when re-ordering, if not quite as a concrete thing. It's more like, we ordered X books a week for 6 weeks, and all X books sold, then we only sold 1/2X in week 7, so we didn't reorder, and it took another seven weeks to sell the rest. If the bookseller reorders (big if), it'll probably be for an amount roughly 1/4X, at best -- assuming the bookseller has the extra cash to spend on a book that may sit there taking up shelf-space and sell (if at all) really really slowly.
Exceptions? Hell, yeah. I recall for xmas I special-ordered the Faeries book (yes, the one by Froud). My business partner didn't realize I'd ordered already, and ordered it as well. Oh, noes! We put out the second book. It sold in an hour. Uhm. We had four requests for more. I ordered five. They all sold. I ordered six. What the hell? In the space of three weeks, we sold something like 18 copies. The book had been out for, oh, sixteen years already? Not really what I'd consider a best seller, and it wasn't cheap, either: but it was a consistent seller. That's what I mean by longtail in the sense of "yeah, so we only sell one a week, so the number is really low, but we always sell one a week, so we'll keep ordering it."
Now, granted, plenty of people are aware that booksellers can return books. This is true. This is also patently stupid, to think that's part of a solid business plan. (I'm going to ignore Borders and all the rumors I hear about their pathetic business practices at this point, and get to that later in this post.)
If you're wondering: YES, I did do this kind of math when writing a business plan for the bookstore, with the attendant question of "how many bookshelves can we a, fit into the space, and b, actually afford?" [I look back now and think, MAN, if only IKEA had been open in our state at the time, we could've had three times as many shelves for the same amt of money, sigh.]
There are a lot of misunderstandings about bookstores as businesses, though I think in part that's because it's such a romanticized business. It practically occupies its own space in our culture, a business unto itself. Look at all the times you see bookstores in media and books: the mystery where the detective owns a bookstore, the book & coffee model (existing long before Borders and B/N hooked up with such), even the ubiquitous wiccan/pagan bookstore with the crystal-wearing owner. It's romantic. It's also still a business.
So let's find a location. Hrm. A single commercial space about the size of my second shop would be about 20' wide by 25' long. That's 500 square feet. If rent is $24/p/foot, that means the monthly rent will be $1000. (Commercial rentals are often set at annual amount per square foot, so you divide the rent by 12 to get the monthly amount. Usually. Not always. But if the rent seems really high, that might be what's going on.)
At 20' by 25', that's probably going to come to 6 rows of shelves (three aisles), with constraints thrown in that you can't have the shelves too close together (remember, people in wheelchairs also read books!). Adding in the back wall, and rounding to an easy number, let's say in a 500 square foot space, you end up with 150' feet of running shelf footprint. Then multiply that by the number of levels per bookshelf, let's say 6, and you get 900 feet of running shelf footage. Let's throw in a low shelf here and there, maybe in front of the counter or along the front wall, and round up to 1000 running feet of books.
(Our business plan, sadly -- lessons learned! -- was so tight on such things that we had maybe a quarter as many shelves as we could've squeezed into the space. We made up the difference with sidelines: tshirts, tarot cards, jewelry, etc. But the bottom line is that every inch must be earning money, one way or another.)
A general rule of thumb is going to be that you can fit from twenty-four books to six books a foot, so saying twelve books a foot isn't perfect but a decent average, plus it's easier math. That means the bookstore can shelf roughly 12,000 books on its 1,000' feet of shelves.
NOTE: keep in mind that these numbers are rough averages, just ballpark figures so you can see what I mean by proportions. That is, all but maybe two shelves of my bookstore were non-fiction. I just didn't sell a lot of fiction, for whatever reason, so I didn't stock it. And most of the alternative and small press and university press non-fiction were not door-stop tomes, either, so for me 1" was actually a bit on the large size -- I'd say we probably averaged a little bit below that. Then again, we didn't have a lot of paperback-size books; most were quality...ugh, or whatever the medium-sized one is called. My brain just fizzled. You know the size I mean, I'm sure: nicer binding, larger cover, but still paperback. Personally, I found they sold the best: people didn't feel like their nonfiction was pulp (ala paperback) but they didn't feel like they were walking out with a bag of bricks, either. POINT IS, these numbers would vary for any store, depending on location, investment, niche, size, and so on.
NOW comes the really annoying part, if you ask me. In the past twenty years for reasons I still can't fathom, book prices have steadily climbed. I haven't seen any significant drop-off in sales (not counting the recent plunge), and in fact book sales overall have hiked, even if you don't count the major blockbusters like Rowling. So I'm not sure why what was a $5 paperback in 1992 could become nearly $10 in 2007, or how hardbacks that I sold for maybe $15-$20 are now $25-$35, but I HAVE MY SUSPICIONS. (Of course.) But for the sake of argument, let's say your bookstore averages out to 1" wide books that go for $20, averaging together nonfiction, fiction, hardback, and paperback. Plus, easier math.
Of that $20, if you are just Joe Schmoe Bookstore, you're going to pay $12 (60%) to the distributor for the book, and when you sell, you'll get to keep $8 (40%). This means to completely fill every shelf in your store, you're going to be shelling out $144,000; your sales receipts will say $240,000 (gross) but your actual net (profit-loss) will be $96,000.
That, of course, is assuming you turn over every single book in the store, regularly, all the time. Ha. Hahahah AHAHAHAHAHA NOT GOING TO HAPPEN. But it's a nice dream. Some books sell faster, some sell slower, some don't sell at all even though you wish they'd go to a good home. Meanwhile, you still have rent ($1000 monthly), utilities, any wages for yourself or employees (assuming you wrote that into the business plan; we didn't, and BOY do I regret that oversight the most because working for nothing is HARD on the checkbook and the psyche), and there's business licenses and taxes and other office-like things you'll need (paper, printer ink, random upgrades to computer, staples, pens, and don't forget the BAGS you'll need for people who buy lots at once and should be bronzed for their awesomeness).
So let's say that rent + stuff + wages comes to a total monthly overhead of $3,500. You'll have to net $3,500 just to break even, which means that in fact you will need to sell $8,750. That means your break-even point, roughly, is about 440 books. (Unless you end up selling nothing but $10 paperbacks, in which case you're screwed because those are never $20 a pop. Ugh.)
That's just your break-even point. You basically just made back all the money you've spent in overhead, and you have nothing in the bank. You're zeroed. If you want to actually turn a profit, you'll need to at least double that, sell 800 books, let's say, and then you end up with a net of about $6,400, of which $3,500 goes to overhead. Now with that money you just made in profit... You do not get a raise, you do not redecorate, you do not go buy new shoes. YOU BUY MORE BOOKS.
Now back up and look at the numbers again. There are approximately 12,000 titles in the bookstore. Let's pretend you've got a crazy-popular place and can sell 1,000 titles a month. (That's 33 books a day, if you're wondering. Some days that seemed impossible, but I also had a great deal less overhead and my rent was far cheaper, too. Those were two major factors in my store's ability to manage monthly profits from early on.)
- $3,500 overhead [fixed costs]
- $12,000 wholesale [variable costs]
+ $20,000 sales receipts [variable income]
--------------------
+ $4,500 profit
Thing is, this doesn't tell you at-a-glance whether or not you're really getting the most for your expenses. That requires one more step, which is to compare how much is going out (all costs) versus how much is staying (actual net profit). There's a simpler way to do this but one that's harder to explain if you're not a savvy accountant (which I'm not), but this was the rule of thumb my business partner (son of a CPA!) taught me:
($3,500 + $12,000) ↔ $4,500
Treat it as a proportion, and reduce until you get $1 value on the biggest side. Since right now that's expenses, that means you divide profit by expenses, like so:
$4,500 ÷ $15,500 = .29 = 29¢ profit for every $1 spent.
Give or take a few pennies, you may have spent less than you earned, overall, but in fact you're making only a quarter for every dollar you're spending. Lovely. In the long run, this ain't much of a profit.
[Before anyone asks, sales tax is NOT a part of this equation. Never is. That's money that's added on top of the book's price, does not stay with the store, and usually gets sent off monthly or quarterly -- depending on earnings -- to the state. For smaller businesses, it's quarterly, which is handy if you can drop that sales tax into an account that earns you interest in the meantime, but since it comes out to pennies on the $100 dollars, it's not worth chasing. You do have to show that you're not touching that cash, though, because it's not yours and therefore never part of your calculations.]
Now you know why I say that bookstores are run on so much of a tight budget that it's almost ridiculous, sometimes -- granted, this isn't nearly as tight as, say, the pharmaceutical industry (1-2%) or the restaurant industry (5% if really good and really lucky) -- although those two examples are ones in which selling in massive massive numbers are what keep you afloat. Books, not so much; sometimes, like during holidays, you can sell five coffee-table books and see profits balloon in ways you never see when you're selling $10 and $12 quality-sized paperbacks. One $50 book, woo!
Ahem, sorry, got a little excited there.
Flaws of the business aside, this example's running profit isn't terribly bad, as the company's still afloat and able to pay its bills and expand a little. It's probably not too bad, in a realistic sense. What does this mean, though? It means that, on average, of the 12,000 objects in the store, figure you'll be selling from 1/10th (1,200) to 1/12th (1,000) books to stay in this range. Let's be really expansive and say you're selling 1/10th, and it still remains pretty true to the business model mentioned in the Dear Author post, which explains the Pareto model: 20% of the titles generate 80% of the publishing houses’ profits.
In a bookstore version, it's more like "10% of the stock may generate 100% of the profits." Why? Because you never know what people are going to buy or want or like or hate, is why. You have to have a broad selection and hope that at least 10% of it appeals enough for people to buy it in enough quantity so you can pay your bills. (Reminder: the rough-10% here is based on the proportion of X copies total versus Y copies to cover costs, which is generally about 10% but could go up, could go down, so I'm going with 10% mostly because it's pretty close to the numbers from my own shop.)
Now for an additional kink, based on my own experience. When we opened, we a) didn't have that many bookshelves (hahahahaUGH), and b) we didn't have a massive influx of cash. We had enough, but not a massive amount, but then, we were only trying to fill a 500 sq foot space, not a 3,000 foot Borders behemoth, either. At the time, there was a mainstream bookseller in town, who focused on the NY Times bestseller list -- that's pretty much what they carried. There was a B Daltons or a Walden's, something like that, at the mall, and a massive three-floor used bookstore.
What we realized was this: let's say, at $30,000 to spend on books, that got us 2,500 BOOKS. Total number of copies of everything put together. We knew already we didn't want to compete with the bookstore up the street, since we didn't want to carry bestsellers but small press & university press books (with a strong focus, it ended up, on alternative-everything as we called it). But Waldens carried a lot of the same topics as well, and they always had five or six copies of a book on the shelf. All the big bookstores did.
We just plain didn't have the money to do that. If we had, we would have ended up with 2,500 books but only 500 titles -- which, as should now be obvious from the intro-accounting stuff above -- cuts seriously into one's ability to corner that 10% needed to get the minimum overhead paid every month. More titles = potential more sales BUT fewer of same title = potential LOSS of sale when two people want the same thing.
In the end, we opted to get one of each. I'd done the research, and the Big Boxes of the time (Crown, Borders, Waldens, Daltons, etc) all insisted over and over that no one buys the last two books. Never! People are used to seeing six, seven, ten books on a shelf, they'd never-ever buy the second-to-last, for some strange retail-psyche reason, and they'd certainly never only buy the one book, on the grounds that it was the one that had been flipped through a bazillion times by other people.
We figured, if from the very start, there's only one of each book, then people KNOW, duh, that they're not buying "the last beaten copy" but in fact "the only copy". Plus, it meant we could carry 2,500 titles instead of one-fifth that, which expanded our potential selection. (I spent HOURS arguing this with our investor, who SWORE we should "do what they do" and have 5 titles on the shelf and it was MADNESS for me to try and make the money "stretch farther" when that was OBVIOUSLY business-suicide. Then we turned around and nearly broke even the first year and completely screwed-up his intended tax shelter. Gee, whoops? HAH.)
YES. I do think it amusing that two years after closing the store, I wandered into a Barnes & Nobles to find there was only one of every book in the nonfiction, and that trend was starting to take over the fiction, as well. HAHAHAHA you big boxes, small bookstores came up with that first! we trained the readers, not you!
However, the big boxes -- Borders, Barnes & Nobles, even Amazon, now -- had something we little stores didn't have and never would. They had purchasing power. The majority of sales in those major stores are on a national level, although individual stores have leeway to increase/decrease titles, add others, per their local sales. But when BN-et-al says to Daw or Baen or whomever, "we'd like to pre-order this title," they're not talking twenty copies, or even two hundred. They're talking potentially in the thousands, even millions if you're a really lucky author or your last name is Rowling. And that, in turn, means that BN can say, "and you know what? We don't want to pay no stinking 60% wholesale cost. Hm, no, we think 40% sounds good for us. Don't like it? Well, we can find some other publisher to buy a million pre-ordered copies from. See ya!"
(This is the real reason I really, truly, totally loathe the near-monopoly of the major booksellers. For that previous paragraph, and the one to follow.)
When these books hit the shelves -- and keeping in mind that the book industry is predicated on this 60/40 split -- that means BN-et-al can drop the price by 10%, 20%, etc, and all they've really done is adjust their retail price to be artificially 40% compared to the wholesale price. That is, I pay $8 and sell the book for $12; for the same book, they pay $6 and sell for $10, but we're both making only a 40% profit -- but from the reader's point of view, hey, this book's brand-new and it's already discounted to $10, and that's way better than $12 over there. Woo!
And there isn't a damn thing an independent bookstore can do about it, because even the really big independent bookstores (of which there are still a few) will never have the buying power of someone who can thumb-up or -down on a million freaking copies at once.
Add in the quiet complaints here and there in the industry about the BN & Borders buyers, who have been known to strike out a cover or title and send it back for 'something else' -- well, that's all good and well, a buyer does have a fair idea of what covers sell, and covers do sell books. But to have that much authority in one person's hands really, really, really pisses me off, as a reader, and as a former bookseller.
I mean, yeah, so Walmart can make or break book deals and music sales, now, as well, but do I really ever want to be stuck reading only those books suitable for sale at Walmart? I THINK NOT. Nor do I want to be stuck trying to assess a book based on covers that Walmart deemed suitable, oh CRIPES noooooo.
Frankly, if B&N and Borders crashed and splintered into a freaking bazillion independent, loosely-affiliated but separately owned bookstores, I would be very very pleased. It would be a GOOD thing for the industry, and it might even propel the publishers into some kind of innovation (which is mostly what the Dear Author post is complaining about the lack of). But right now, I don't see the publishers having quite so much leeway to innovate as might be assumed from an outsider's point of view -- because they're hamstrung by certain laws that went into effect in the 90s, and by the past two decades' development of the three-headed devil-dog at the gates of retail: Walmart, Borders, and Barnes & Nobles. (One might say four-headed, if we include Amazon.)
Someone's got to cut off at least two of those heads, and trim the other two down to size, before the publishing industry (I think) is going to have as much room as it'll need to really start innovating. Or maybe another way to put it would be -- for the more reluctant, or stick-in-the-mud publishers -- that seeing Cerberus get cut down to size might scare the pants off them into figuring out a way to make sure they're not NEXT.
As for Borders, part of their business model is something called churning, which is an option I never freaking got from anyone because I bloody well wasn't big enough. Near the top, I mentioned being able to return books. You can. It's usually got to be within a certain amount of time -- I think 60-90 days got you everything back, and up to 6 months you could return but with a 10% loss for 'restocking'. The problem is that somewhere in the mid-90s, the [tax] laws were changed about 'value of goods' and 'property taxes' for businesses.
Pre-change, (when I was chatting with the folks for my weekly phone-ordering call YES WE HAD NO FAX OKAY!?), a distributor might have, say, $100,000 worth of books in its warehouse. Physical books, sitting on the shelves, waiting to be sent out or having been returned, waiting for someone else to order them. These books just sat there, if no one wanted them, and the distributor didn't pay attention to them. (This is the Backlist; it's the Dead Book Place; it's where Rare Book searchers would go to find that out-of-print book you really really want, for a small fee.)
Then things changed, and "unsold goods" were made "valuable property" and therefore something that could be taxed. In other words, what had been a bunch of books sitting on warehouse shelves gathering dust now suddenly became $100,000 worth of taxable items. Suddenly a distributor was going to be losing a LOT of money if it let those books just sit there -- but (oh, this burns me) if they destroyed the books, then there's nothing to pay taxes on, AND they can take a loss on what didn't sell.
NOTE: someone pointed out elsewhere that this existed for awhile. Could be. All I know is that the policy we were told, per our contracts with distributors, was based on the assumption that we could return and they would restock and the books were available for turn-around. (There was a limitation, though; I seem to recall you couldn't return a book after 6 months, or maybe a little longer? Hrmmm.) Shortly after we closed, I was chatting with another bookstore owner who told me the policies had changed: now returns weren't nearly as generous, due to this tax-on-items thing. As I asked elsewhere, was this because the industry had been under the radar previously? Or because it was in a loophole? Or just not being enforced? I dunno. I only know the policy changed somewhere in mid-90s and that this change in tax law was pointed to as the reason.
Which, naturally, got turned over to the bookstores. Eh, if you're buying a million copies of a title and you're also making 50% to 60% profit margin and have the leeway to make less and sell more, then the less-considered part of this is that you can also rearrange. Books that don't sell at this store, you can transfer to another, where they are selling, and thus you can avoid massive loss-returns. Or, if you do have to return, you're already buying so much that a more generous return agreement? Probably already in the cards.
Not so for small businesses. To have a book on the shelves for three months, miss the deadline, and return it, means you just paid -- using above example numbers -- $2 to basically 'house' the books. That is, you paid $12 to purchase it, and got back $10 when you returned it. UNTIL that law (or its belated effects) went into effect, at which point a lot of terms changed to say that now you couldn't return a book at ALL if you didn't return it fast enough.
To refer to the post's originally-intended topic, this would be chopping off the lizard's tail right at the base. WHOMP. Gone. If the book doesn't sell fast, then you've got to get rid of it fast, or you're stuck with it. Smaller bookstores must eat the risk or do stock/returns at a much much faster rate than before. So if you've got lazy readers (like me) who wander into the bookstore 5, 6 months after a book came out... it's not on the shelf. Amazon becomes my only choice. OR, you don't order at all, and readers learn to not even bother checking, and go straight to internet-ordering, whatever the source.
(Gee, thanks, big box bookstores, for stacking the house of cards so it'll all fall on the little guys! Yeah, so that's usual in business but this is above and beyond what I'd call usual on any kind of a sustainable level.)
But wait! There's more! The usual terms with distributors are 1 week, 30 days, 60 days, and 90 days, depending on your credit history with them. (We started with pay-on-arrival, and by six months we were at pay-in-30-days, and one distributor had us at pay-in-60 by the time we closed, verrrry sweet.)
What does that mean? Oh, easy: that's when you get to churn.
Order $1000 worth of books. Note the payment says, "since you are fancy massive bookstore with lots of buying power, you have 90 days to pay from the date the order was delivered in full". However, you still only have 60 days before you can return without a restocking fee & tax-surcharge per that stupid warehousing-books law. So on day 59, let's say you return $500 worth of books, and get $500 credit from the distributor for books you have not even paid for yet.
That's churning.
That's what Borders did like crazy; it's like a microcosm of the financial market's madness gone absolutely bonkers. On top of that, Borders pulled a really fast one that I find supremely annoying, which effectively dicked over every small press and university press out there: they did not return to the original distributor but to Baker & Taylor. Ohhhhh, that burns me.
[There are three massive distributors who do most of the business: Ingrams, Baker & Taylor, and ARA. If you've ever flown in a commercial plane, you've probably dealt with ARA food, since ARA also distributes food for universities, many businesses, and a number of airlines. They're much more all-over-the-place; their impact on publishing is in the area of magazines. Ingrams and B&T are focused on books. There may be other biggies, but those two book-distributors are pretty much the very top monsters.]
This is what I mean: Borders orders $1000 from, say, University of Virginia press. UVA's press is also distributed through Baker & Taylor, and I know from experience that I couldn't always remember which distributor had sent which book. (It's rarely marked on the sales tag.) So I'd think, I'm pretty sure I got this from Baker & Taylor. They'd call a week later saying, "we didn't sell you this book, BUT we do have a deal with that particular publisher, so we'll give you credit anyway, return the book to them, and call it even." In other words, the $10 they gave me, they'd get from the original publisher upon receipt of the book. Alley-samey, really.
[In one case, I accidentally sent a return to New Leaf, a really awesome small-press distributor that had the most awesome wonderful people working for them who saved my hide many many a time -- and they called up and said, "this wasn't from us, so we should return it, but three of us think it looks cool, so we're going to give you a credit for it and call it even so we can read it!" Kinda like buying... but not. Sort of. Heh.]
Now, thing is about small presses: if you order a lot of books from them (which Borders would, of course), it's going to be hard for them to fill the full order, sometimes. They're called "small" for a reason. This is where I explain why I italicized the terms -- because in those rare cases where a book was sold out, and I had ordered more than one copy, this made the order incomplete. I'd get a note saying I didn't have to pay for the order until it was filled, although my terms were usually more like "you have to pay for what you did get, but not for what you didn't get". Borders had/has much more generous terms: if they order 500 copies and only get 100, they don't pay for those 100 until the other 400 have come in.
Add in the churn, and you can see the madness going on here.
Borders is busy ordering, doesn't have to pay, AND is returning books to Baker & Taylor instead of to the original, small, publisher-distributors. So the publisher/distributor is sending the rest of the order while the first half is being RETURNED FOR CREDIT, and Borders can then use that credit to get books through Baker & Taylor, who carries a helluva lot more than just that one small press. It's like, "I ordered 500 copies of the Book of Vacuum Cleaner Hoses, only got 250 so far, then immediately returned those 250 not to Hose Press but to Baker & Taylor, got $5,000 credit, and turned around to use that to purchase from Baker & Taylor 500 copies of Dan Brown's latest tripe, on which I've now made $5,000 on top of the money I didn't actually even pay yet."
[ETA: I just found copy of the actual suit, which names Baker & Taylor, not Ingrams; previous reports I'd found had named Ingrams, for some reason.]
Notice that Borders has not paid out a single penny yet. Basically, they ordered something, returned it elsewhere, and used that return to buy something else which was sold at a profit -- and meanwhile, the original distributor/publisher has not even been paid a penny.
On behalf of the small presses and university presses who kept me in profits for three years and always produced such awesome books, when Borders goes under I WILL BE DANCING ON ITS GRAVE.
Yes. It will be a big black hole in the bookstore industry, and I expect a lot of authors will suffer because those are lost sales. But on the other hand, authors who do make money off that kind of shenanigan, well, there's a part of me that thinks: it's kinda like people who flipped houses and made boatloads and now their buyers are in houses that cost too much and are worth too little. It's making money... at the cost of devastating other parts of the system. It's not self-supporting. It's self-defeating, eventually.
And the destruction of one like Borders, maybe a hard thing in the short term, but in the long term, I would hope it teaches a few lessons about the innovation that's really needed. Not just in POD or in ebooks or in using Amazon's lessons in a brickfront, or even in what's wrong/right with the publishing industry itself -- but in how to better use today's developing technology to make sure that small businesses can become, and remain, competitive with cannibalistic monsters like Borders and prevent such slaughter from happening again.
I had meant to talk about the lizard-tail, but I'll do that next -- it just seemed like (or maybe it's my bias) that unless folks understand how the bookstore industry nuts & bolts things, then it wouldn't make sense how to go about lizarding things. Although that's possibly also because I don't have more than a general clue how publishing works, but I do have a grasp on how bookstores work, so I'm going to naturally approach any solutions from the POV of whether it would be help/harm to bookstores.
goto part two
![[identity profile]](https://www.dreamwidth.org/img/silk/identity/openid.png){kind=small}
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Date: 10 Jan 2009 09:35 pm (UTC)no subject
Date: 10 Jan 2009 09:40 pm (UTC)no subject
Date: 10 Jan 2009 09:57 pm (UTC)(The first rule of publishing -- coming at it from the opposite end -- is that part of the editor's job is to keep authors the hell away from the folks who actually make and sell books. And as most of us authors don't work in bookstores, this sort of explanation of the underlying economics is actually really useful to us.)
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Date: 10 Jan 2009 10:09 pm (UTC)I mean, sure, I'd like to get published someday but I'd probably never be allowed near a convention again, because I always find myself wanting to throttle publishing folks who have no clue what it's like to own/operate a bookstore. (The romanticizing really doesn't help, either.)
The idea that authors should be separated from bookstores... cripes, who came up with that one? Now, granted, it is frustrating to meet authors who know nothing and lambast booksellers like it's something personal -- but if an author's educated (or at least open to understanding) the bookseller's needs/constraints, it would really make life easier in some ways. I mean, readers listen to authors, and nobody listens to booksellers, so when authors spout off from ignorance, it just makes life even harder on the already-squeezed booksellers.
A'course, that experience is the reason when I hear authors fuss about covers that I have to laugh. Because as a bookseller, I can tell you: people really DO judge a book by its cover. That thar's the truth, like it or not. Heh.
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Date: 10 Jan 2009 11:46 pm (UTC)Perhaps this is "the first rule of publishing," but if so, it's a rule I never heard.
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Date: 10 Jan 2009 11:03 pm (UTC)(I gather, though, that you're using "long tail" in a slightly different way.)
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Date: 10 Jan 2009 11:08 pm (UTC)That said, yes, I am using it in a slightly modified sense, mostly because the visual of "long tail" (of lizard or other creature) fits what it'd look like if you map out the way books sell, not as separate titles but as clumps of units. That is: BIG body for blockbusters, and long skinny "title here, title there" for everything else.
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Date: 10 Jan 2009 11:32 pm (UTC)Thanks for the explanation. I totally did not understand it before. Well, I got part of it. But wow.
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Date: 11 Jan 2009 12:01 am (UTC)This is my best guess on what I do know of the industry, okay?
$10 book = $6 to pub, $4 to bookstore.
direct from publisher: bookstore pays $5 (no distributor fee)
from distributor: bookstore pays $6 (distributor fee)
When bookstore returns to distributor, they forward the book to publisher & demand $5 for it, which is what the publisher would have repaid to Borders anyway. So in effect, it's not entirely illegal, it's just not very ethical. It's a loophole and a fast move, and cruel, but not illegal -- and it's one that (in the case of EC in particular) should have, would have, been caught by a distributor/publisher with better organization skills.
Which is to say: EC's stupidity, IMO, made it even easier for Borders to churn so much.
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Date: 10 Jan 2009 11:36 pm (UTC)no subject
Date: 11 Jan 2009 12:03 am (UTC)The sad thing is that these kinds of shenanigans were already starting in the early 90s, as the Cerberus of bookstores really started to expand into the monsters they've become. We used to sit around and bemoan the fact that we were too small to get away with stuff like that, ourselves.
(Okay, I admit it, also kinda too lazy. I hated doing returns so much that I never would've churned even if I had the option, because that would mean, well, doing returns. UGH.)
Great post!
Date: 11 Jan 2009 01:18 am (UTC)~Persephone Green
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Date: 11 Jan 2009 01:49 am (UTC)no subject
Date: 11 Jan 2009 02:21 am (UTC)I managed two bookstores for B&N, one a smaller trade store, and the next one of the superstores. I just wanted to add something, if I may. Another advantage that the big stores have that many independents don't, which is the automatic re-ordering system. If a book is 'modeled' in my B&N, and it sells, my computer talks to the main B&N computer at night when it downloads all sales info, that computer informs the warehouse, and my replacement copy is automatically on my way, either from a B&N warehouse or (rarely) somebody like Ingram or Baker & Taylor.
I imagine some independent bookstores automatically track sales and spit out what books need to be re-ordered but I doubt that their computer automatically informs Ingram that said book should be re-ordered. And that means more hours spent by employees at the independent making sure that they restock the books that sell well.
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Date: 11 Jan 2009 02:31 am (UTC)I ended up writing the program we used in my shop (because I hated the interface on the system we originally purchased), and any purchases went into a compiled list -- the thing was, that produced a weekly order. We couldn't do automatic orders because we just weren't going to sell enough in one day to make the shipping costs worth it, so we saved up and ordered once or twice a week. I guess you could say that's semi-automatic.
The automatic element does boost the part I'm saying about there being certain books that you just reorder automatically because, y'know, it sold, so maybe another one will. (The other reason I can see independents not doing that is because with a smaller clientele, you can't always assume that a one-time-order will automatically produce a second sale of the same. Niche books, yeah, possibly. Otherwise, hrmm.)
Although, to be honest, I really enjoyed ordering books one-by-one over the phone, especially with New Leaf. That being all small presses and whatnot, the person would invariably say, "you've got a lot of X and Y topic, this time," and I'd say, "oh, we've got some new customers who are really into that," and the person would say, "then you have GOT to try these books, they just came in, here's the titles," and I'd go, "send, send!" That's one reason I say those folks were awesome. They were like mini-booksellers all by themselves.
Well, that, and the time someone walked in and wanted to know if I could name a book with a blue cover that had a woman holding a candle and the author's name was something like, y'know, Jones. Or maybe Brown? or Smith. Something like that. I was on the phone to New Leaf and in ten minutes one of their phone-guys had the title. They ROCKED. I still remember that moment with great fondness, and the look of absolute shock on the customer's face. Priceless.
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From:Great post
Date: 11 Jan 2009 05:30 am (UTC)Re: Great post
Date: 11 Jan 2009 05:40 am (UTC)no subject
Date: 11 Jan 2009 07:20 am (UTC)Unfortunately, that means when the bookstores big enough to muscle that ahead-of-time discount out of things gets done, the rest of us are facing a list price that's gone up to $12... when in fact the publisher/distributor is getting the same, the big bookstores are getting less but are cutting out the rug from under the independents who just can't afford to sell every book at 30% -- you can't do that without major, major volume. The industry's margin is too tight otherwise.
If a book is done nicely, I don't mind $20 for a hardback. Maybe a little more if it's one I really want to save for a long time -- but that's usually only after I've bought it in paperback, had the paperback fall apart, and know that this time I want one that'll stay in good shape for years.
Then again, I think I buy hardback fiction maybe, uh, once a year. At most. More like once every few years. On the other hand, nearly every non-fiction book I buy is hardback AND it's usually $35 to $50, if I don't get it on sale. BLEAH.
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From:It's less the discounts, it's not the answer I'm looking for really
From:Re: It's less the discounts, it's not the answer I'm looking for really
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Date: 11 Jan 2009 04:14 pm (UTC)no subject
Date: 11 Jan 2009 04:55 pm (UTC)no subject
Date: 11 Jan 2009 04:19 pm (UTC)When you think about it, the book business is *phenomenally* wasteful - at least musicians can try out their stuff on the road and have some idea if they have an audience. (Has the poster who thinks it costs $2 to make a CD looked at recording studio prices lately?) But book publishing is so much of a crap shoot, and then all these books being shifted around on spec. I suppose we're heading for the time when authors *must* publish opening chapters on the Web to see if their books will garner enough interest to be worth printing...
wg
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Date: 11 Jan 2009 05:03 pm (UTC)That was me! And it was quite late, so I probably should have explained better: back when CDs were first out, they cost, what, $15 or so, and the explanation was, oh, they're soooooo expensive to make and burn and package; the production costs, that is, were a massive proportion of the final cost. But over the past twenty years, the production costs have plummeted as technology has improved, and I seem to recall reading somewhere that the actual CD itself is at most $2, including label printing & whatnot -- yet the prices have steadily gone up, up, up.
IOW, the increase in production efficiency did not translate into a significant decrease in price. Come to think of it, the combination of drop in cost plus increase in profit didn't really translate into a significant increase in the artist profits, either. Hmmmm.
(Music industry? Oh, no, I am not at all happy with the music industry, but that's for another post!)
I suppose we're heading for the time when authors *must* publish opening chapters on the Web to see if their books will garner enough interest to be worth printing...
Can't see it ever being worth much. It's like surveying before you open a new business. Sure, eighty people say they'd come to your coffee shop, but people are very quick to agree when a) you're standing right in front of them and b) they're not actually required to put anything on the line, it being hypothetical. I personally wouldn't put much stock in that kind of online vague polling setup.
On the other hand, publishing as an industry is so byzantine and mysterious in its ways that I have to admit: who knows!
But it more commonly refers to the notion that a few big blockbusters sell a LOT and the long tail is all those small titles that sell vanishingly small amounts, but that together add up to a big chunk of underserved market.
*sigh* I was under the impression (and the comments around here reinforced it) that long-tail referred to a single person's work, I suppose with their 'backlist' being their long tail -- while I think of it as businessperson, in much more the way you described. That type of use was causing "I don't get it!"s, so I tried to sidestep with a better visual analogy.
But I also just really like lizards, too.
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Date: 11 Jan 2009 04:51 pm (UTC)no subject
Date: 11 Jan 2009 05:07 pm (UTC)This talk of "rip off the covers and return" just boggles me. Outside of (some) magazines, I didn't have a single instance where I could return just the covers on books. Not one. The vast majority of our books were small press, and they wanted the titles back, in toto, nice and clean and not beaten-up and sure as hell not ripped up.
(Now, some may have been ripped up once they got them back, but me, personally, nunh-unh, never going to go around ripping up books.)
However, I'm not sure whether our exemption from that type of (honestly, cheaper way of) book returnage was because we were so small, or because we were predominantly small/university press.
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Date: 19 Feb 2009 06:50 am (UTC)Thank you so much for explaining how all this works. I was a bookseller for 5 years (it was how I paid my way through college) with Waldenbooks in the late 80s-early 90s. Some of what you explained was very familiar, other parts brand new and very enlightening.
I also want to say "THANK YOU" in the capacity of author for your comment that covers affect sales. I have preached this with the fervor of a zealot. My experience and observations as a bookseller proved that a thousaand times over. It's why I gnash my teeth when I get a crap cover and why I'm overjoyed when it's a good one--this impacts sales.
It's disheartening to read about the obstacles an indie has to face in this current market with its big box stores and their abusive method of churning. I sincerely hope there's a much needed change on the way in the future.
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Date: 19 Feb 2009 07:43 am (UTC)But bad covers, basically, require hand-selling. Otherwise they're just ignored, because bad covers are ugly and turn people off, so much they won't even look at the rest of the book.
I think, myself, this is why all thriller/mystery covers pretty much look identical. It's safer. Same for most romance books. So I don't really fault those publishers who stick to tired trends in book covers: it is an advertisement.
It's also why, as much as I'd like to ever have pretty covers myself, you'd never hear me publicly snarking about cover design. It's an incredible art, and a complex one... but I can still look at a cover and tell you what will (or won't) sell -- there are some rules, once broken, that undo any other cover-goodness.
I actually liked Waldenbooks -- most of them were mall-based, and franchises, which meant they were often working in a symbiotic form with other local bookstores. Most Waldens just never seemed that big, so they had to cooperate. Hell, until Cerberus really hit its stride in the mid to late 90s, we must've had ten or more major franchises in the US: Waldenbooks, Crown, B Dalton's, and a bunch of others I can't recall right now. Whoosh, all gone now, swallowed whole. Pity.