Sunday, December 07, 2008

Victoria Strauss -- Publishing's Week of Gloom

Last week was not a good one along Publishers' Row.

- Random House USA announced a major reorganization, laying off staff, consolidating imprints, and axing the heads of two of its largest groups.

- Houghton Mifflin Harcourt, which previously suffered firings, staff departures, and a temporary freeze on acquisitions (though there are indications that the freeze may be more of a slushy than an ice cube), announced massive staff layoffs (probably in the hundreds) as part of sweeping reorganization plans aimed at streamlining its K-12 publishing divisions.

- Simon & Schuster eliminated 35 positions. PW reports that "the cuts came in all areas of the company, including S&S’s publishing divisions, operations and sales departments and international division."

- Thomas Nelson initiated the second round of job cuts this year, laying off 54 workers--approximately 10% of its workforce.

- Penguin Group announced that it would freeze pay raises for staff earning $50,000 or £30,000 or more.

- HarperCollins will defer all raises until after July 1, 2009.

One major exception: the Hachette Group, home of the Stephanie Meyers juggernaut, not only doesn't appear to be laying anyone off, but plans to give bonuses to every employee in the company.

All of this is certainly grim news. No doubt the coming weeks will bring more. Still, given the atmosphere of dread bred by daily reports of economic chaos, I can't help wondering how much of the rush to slash staff and expense is driven by actual planning for the future, and how much by simple fear. In an article about the staff cuts, the New York Times notes that according to Nielsen Book Scan, book sales are actually up slightly through the third quarter of 2008. Will they fall precipitously enough in October, November, and December to make the retrenchment frenzy look timely rather than panicked? The fourth quarter figures will tell the tale.

I also wonder whether all the downsizing and cost-cutting will have any impact on advance bloat. I've seen discussion over the past few months to suggest that midlisters have been feeling advance contraction for some time--but that's not where it needs to happen. It's the over-hyped debut novels, the celebrity children's books, the fad-of-the-moment projects where there needs to be some scaling back. And how about cutting lists? While it seems crazy to put a hold on acquisitions altogether, as at HMH, there are far too many books being published. The publishing industry has been shedding jobs since the 1980's, when the conglomeration trend began, yet the number of books published has continued to rise. This logic-defying trend damages authors--who must struggle for visiblity in an overcrowded marketplace--and publishers, which toss out books like spaghetti, hoping that at least some will stick to the wall.

The news isn't bad for all segments of publishing. TeleRead reports that US wholesale ebook sales soared in the third quarter of 2008. Even with steady increases over the past few years, ebook sales numbers are still a tiny fraction of p-book sales numbers--but it's an interesting trend.

16 comments:

Esther said...

I wonder how many of the job cuts are related to the passage of the CPSIA? Even children's books and related merchandise will have to be tested for compliance. I am thinking of popular titles such as Olivia or Fancy Nancy. I am wonder if the massive reorganization of Houghton Mifflin and their k-12 division. They would be directly affected by this.

Victoria Strauss said...

Esther, thanks for this comment, and for drawing my attention to something that had completely escaped my notice. The impact of the CPSIA on printers and publishers is a really interesting issue, and one I definitely want to research further, probably for a future blog post.

That said...my impression based on the small amount of research I've done so far is that the impact will fall most heavily on printers and paper manufacturers, not just because they provide the raw materials, but because publishers seem to be passing the certification onus on to them.

BuffySquirrel said...

I thought Twilight was a pretty poor book, but the author's name is Stephenie Meyer, not Stephanie Meyers :).

Janet said...

Why don't they hire people like you to run the publishing houses? No more mega-advances and shorter lists - sounds like common sense to me.

ALC said...

I would be interested to know what genrés of fiction (both MG & YA) are still going strong & continue to be profitable to their publishers. I write MG/YA supernatural suspense (for lack of a better description at the moment). I also have a project planned for more of a pure SF novel aimed at YA (although I'm not certain that this is a profitable genré for this age group - I feel that the story is compelling & I will write it for my own peace of mind if nothing else).

Esther said...

re: The CPSIA and self-publishers, wouldn't the responsibility fall onto the self-publisher? I have been talking with a rep of Usborne books and they haven't decided on their position yet. Still, as a fashion designer in the children's industry and future writer/publisher on this subject, this has me greatly concerned. From what I can tell as the end of the supply line I am the responsible party for testing. In the publishing world, is it the printer or the publisher or even the retailer? I also found this interesting post at a related blog.:

http://issues-in-publishing.blogspot.com/2008/11/cpsia-sneaking-up-on-us

Awesome blog, BTW.

Brian Clegg said...

It seems the November (US) sales figures are up by 10% on the previous year, with children's books up a massive 33.7%. (See Publisher's Weekly - http://www.publishersweekly.com/article/CA6619697.html) It looks like the old theory that books sales do well in a recession is true.

Victoria Strauss said...

Adding link for the PW article. I knew I'd seen this and wanted to include it in my post, but couldn't find it yesterday. Thanks, Brian.

Jessica said...

Hi Victoria,
You've got some great info here!
I'm not a member of Absolute Write Water Cooler, but I wanted to let you know about an agency that charges fees.
I'm not sure how to post it on the site so I was hoping it's okay to do it here?
Anyways, I just received a rejection from Big Score Productions Literary Agency. They have alot of legit sales on their website, but in their rejection letter they say they'll read my proposal for fifty bucks. I thought maybe people new to the industry should know that that's not the norm, or even necessary.
Thanks for letting me comment here.

Victoria Strauss said...

BookNet Canada reports a nearly 5% increase in book sales for November 2008, over the same period in 2007.

Jenny said...

Victoria,

When we read that the number of books published has grown greatly, don't the statistics cited include all the vanity self-published books that never sell to anyone but the authors' relatives?

I suspect that publisher promote the idea that more books are being published because those unfamiliar with the industry think this is a sign that publishing is healthy. I have heard that statistic reported that way on NPR in a story that clearly was including vanity publications in the total.

But my impression has been that the mainstream houses are cutting way back on the number of books they publish and eliminating all but what they believe to be the most profitable genre authors.

The difficulty with getting credit is also hurting bookstores, so they are likely to be stocking less books because even though they don't have to pay for them if they send them back, they DO have to pay for them while they are on the shelves.

This poses a big threat to publishers who sell mostly via the chains, even if some of their books were selling briskly because it means that fewer of their books will ever make it to the shelves.

Many books are still largely sold by shelf presence--people see a book they didn't know about while looking for something else. So if stores won't pay the carrying charge to stock these consignment items, the books won't sell.

It is an ugly business! I did pretty well as a small publisher in the 1990s and sold many thousands of books through the chains. But in this market I'm a lot happier selling exclusively through online stores. Not having to deal with returns means I can sell a lot fewer books at a higher production cost per book and still make out better financially.

Jon Bard said...

Hi Victoria,

Excellent, concise recap of a tough week. Thought you'd want to know that I highlighted this post in today's installment of Best Children's Lit Blog Posts of the Day!

You can see the video at http://write4kids.com/blog

Congrats!

All the best,

Jon Bard
Managing Editor
Children's Book Insider, the Newsletter for Children's Writers

Victoria Strauss said...

When we read that the number of books published has grown greatly, don't the statistics cited include all the vanity self-published books that never sell to anyone but the authors' relatives?

Sometimes. That's the fallacy behind the widely quoted news a few years ago that nearly half of all books published sold fewer than 99 copies. Makes it sound bad for publishing, but what frequently wasn't noted was that those aren't trade books, but books put out by the POD sector.

However, the number of trade books published really has increased hugely over the past few decades. In 1971, Bowker reported US trade book title output at around 37,500 (this figure comes from the book Books in the Digital Age by John B. Thompson). By 2007, still according to Bowker, title output had risen to more than 276,000--and that was the first year that the POD sector was broken out separately, so it's a reasonable basis for comparison. (If you count POD books in for 2007, title output exceeded 411,000.) In 2007, US title output just for fiction exceeded the output of the entire US trade book industry in 1971.

The difficulty with getting credit is also hurting bookstores, so they are likely to be stocking less books because even though they don't have to pay for them if they send them back, they DO have to pay for them while they are on the shelves.

Pay for them how? Could you elaborate? I'm not sure what you mean here.

Jenny said...

Victoria,

When a bookstore ordres copies publisher's books from a wholesaler like Ingram and keeps them for more than ninety days, the wholesaler pays the publisher for those books with funds I assume come from the bookstore, given how stingy the wholesalers are.

The publisher may have to refund those funds to the wholesaler who then repays the bookstore a year later when that book is returned, dirty and stickered, for full credit. But between 90 days and the time the book comes back, the money is in the publisher's pocket and someone paid it, almost certainly the bookstore.

I know this because I got books back from the wholesaler that I had to credit that were first printings returned more than a year after they had sold through.

I also think the bookstores may have to pay the wholesaler when the book is shipped.

Here's a blog that discusses Borders' problems and early returns Todd Sullivan's ValuePlays: Borders.

The NYTimes reported today that Borders is attempting to find a buyer due to "liquidity issues."

NYTimes Borders Considers Selling Itself

Borders loss would seem like a huge hit to publishers, but the early returns would have already been an unexpected, nasty hit.

Publishers budget for returns based on past patterns of returns which are almost predictable.

OTOH, I believe that Borders signed its death warrent back in 2000 when it threw out the thousands of small press books that made it a destination for many of us and hired some "Shelf management" firm to stock its stores so that they ended up looking like "B&N Lite."

Victoria Strauss said...

Just in: Macmillan follows Penguin's and HarperCollins's lead, and puts a freeze on raises for anyone making over $50,000.

Shawn James said...

I read an article about this crisis in the publishing industry In New York magazine. In it they cited numerous problems for the decline of the publishing industry, but cited the root cause as big advances by authors as a drain on resources and a cause of most of the recent huge losses. Many authors like James Frey were given $1 million dollars or more for books that sold 250,000 copies or less. One title by a first time author ($1.7 million advance) sold only 35,000 copies on a 250,000 print run! Another sold 25,100 on a 500,000 print run! The books cost more to print than the publisher made in profit! Combine this with the high priced celebrity advances, the numerous fiction scandals (Kavvya Viswanthan, James Frey again) Scholastic's inability to fill the Harry Potter void (They should have been searching for a new franchise after Harry 2 IMO) and the decline of the midlist and it's easy to understand why the industry is in trouble.

IMO, the publishing industry is going to have to change the way it does business ASAP if it's going to survive. The days of $1 million advances, auctions, and 500,000 print runs for first-time authors are over. Writers are going to have to prove they can make sales of 100,000 or more before they start asking for advances over $50,000.

Editors who keep their jobs are going to have dare I say it- Expand the mid list! Contrary to popular belief the mid list is not a bad place for a writer. It's a place where talented authors are given a shot to develop a their craft and prove they can not only establish but maintain an audience. It's a place where publishers separate the wheat from the chaff; where writers develop the characters and stories that become the million sellers and the editors who buy them can effectively manage an aspiring author into a literary star.

Publishers are also going to have to cool it on the celebrity books. Tell-all, cookbook or autobiography, They now cost more to produce than what the publisher makes in profit on them nowadays. After the six or seven figure advance, the 500,000 print run, most only sell 250,000-300,000 copies tops. Publishers really have to start scaling back on Celebrity books and exploring other markets.

Publishers are also going to have to stop this grab on copyrights with these newfangled clauses that keep books in print indefinitely. They're a drain on resources and money publishers desperately need to keep print operations afloat. The industry won't be able to develop the new crop of authors as long as it holds onto dead weight- books that failed to meet sales expectaitons. If a book fails to meet sales, then maybe the rights should be released back to the author. Keeping these titles on a POD server does nothing for the publisher or the author except add for the expense of the POD server and printing machines, and royalty reports. What's more embarrassing for an EIC to tell his corporate bosses? To say a book hasn't sold in five years or to just say it's out of print?
It's not all gloom and doom. This crisis is an opportunity for publishers to relieve themselves of dead weight authors, dead weight titles, unprofitable business models and get more aggressive about selling books to readers.