The Three Percent Problem. Chad W. Post
for the distributor not the press itself. And a press looking to sell its books across the country has very few choices on how to go about doing this.
On the plus side, nonprofits are able to receive grants and donations, including money from the state and federal government, a huge benefit that will be touched on below. Donated income makes up a significant part of a nonprofit’s budget, and supports all publishing activities, from paying authors and translators to printing and promoting books.
Just because of the scale, indie presses don’t have quite the same pressure to hit sales goals as commercial houses do. Expectations are more modest, as are advances and marketing budgets. Rarely do you read of an independent spending millions of dollars on a particular book. At the same time, there isn’t as much money available for marketing and publicity, and as a result, overall sales levels tend to be lower at an indie press . . . except when it comes to literature in translation.
It’s worth dwelling on sales expectations for a moment, since it creates such a radical difference between commercial houses and nonprofits. At your typical nonprofit, employees are involved in all aspects of the business. An editor can also be the publicity person, the marketing director might also be in charge of grants. Salaries are slightly lower than at the big houses, but in terms of total cost per book, nonprofits tend to get a lot of bang for their buck. In other words, the average operating expenses—rent, utilities, salaries, benefits, etc.—for a book published by a nonprofit are considerably lower than those of a big house. Obvious, I know, but this means that a press might only need to sell 5,000 copies of a title to breakeven, instead of the 15-20,000 needed at a commercial publisher. Suddenly, the pressures of finding a best seller evaporate . . .
This isn’t even looking at a situation like the one for Open Letter. As a trade-oriented house that’s part of a university, we don’t pay rent, yet have access to certain things other nonprofits don’t, such as a funding base (alumni) and an endless supply of interns. The stakes are automatically a bit lower, which allows a press to focus more on its mission while expanding the possibilities of what it can publish.
With a smaller staff, a more manageable list, and reasonable sales expectations, independents are in a better position to invest a lot of time and effort into promoting the literary fiction and books in translation it is publishing. The stereotypical image of an independent (or even better, a nonprofit) publisher as someone who is extremely passionate about the books they’re publishing, someone who spends all his/her time obsessing and worrying about the press, about reaching readers, about finding ways to keep the press afloat, really isn’t that far off. And this contributes to the overall marketing of a press’s books.
Indie presses tend to have a stronger editorial identity than commercial houses, and cultivate a sense of customer loyalty that doesn’t exist for Random House or Simon & Schuster, or others. Soft Skull, Archipelago, New Directions, these are presses that are clearly branded, that readers trust in, and that fans are willing to take chances with. An obscure Finnish author published by Archipelago means something entirely different than one published by S&S. Although indies and nonprofits have fewer resources, there are some advantages to being small, nimble, and focused.
Stage Three:
Financial Collapse, the Borders Situation, Distribution, and Other Bad News
Over the past few years a number of events have occurred that have shaken up the industry as a whole. Some are more severe and immediate than others, but each event is shaping what the future publishing world will look like.
Even if you’re not a consummate reader, it’s been hard to miss the steady decline in book review coverage. Across the country newspapers (facing their own set of challenges) have been laying off book review staff in favor of running much cheaper syndicated reviews, such as those from the Associated Press. In 2008, a number of standalone books sections—including the L.A. Times Book Review—have been folded back into the paper. Book review editors such as Teresa Weaver at the Atlanta Journal Constitution and Oscar Villalon at the San Francisco Chronicle have lost their positions. The New York Sun, which, for all its crazy off-the-wall editorial opinions had one of the most cosmopolitan arts sections in the world, ceased publication at the end of September. And the magazine scene isn’t much better. The situation is so dire that the National Book Critics Circle started a campaign to “save book reviewing.” From a publisher’s perspective, this decline is really bad news—the fewer outlets available for review, the more difficult it will be to get any attention for your titles. Especially when everyone’s reviewing the same twelve books . . .
Distribution is one of the key problems for all independent presses. It costs a fortune (rates such as 26% of net sales plus 4% of returns, plus standard storage, catalog, and set-up fees, are not at all uncommon) and despite everyone’s best intentions, giant distribution companies aren’t ideal for getting books into stores. When sales reps are responsible for selling books from more than a hundred presses, it’s physically and mentally impossible to know all the titles they represent and to be able to specifically pitch each of these books to bookstores.
Back in the fall of 2006, AMS—then the parent company of Publishers Group West—went bankrupt, and, as a result, stopped paying the dozens of publishers PGW distributed. And if that weren’t bad enough, this happened around the holidays, and PGW wasn’t able to ship titles to stores during the most profitable time of the year for the book industry . . . Eventually, Perseus bought PGW (they bought Consortium earlier in the year), bringing together an enormous percentage of independent presses in America under one roof, but not before some serious economic damage had been done. Soft Skull almost went under and was eventually sold to Counterpoint, and presses are still laying off employees because of the lingering effects of this collapse.
There’s no need to rehash the epic financial collapse that has rocked the world economy and is sending us into a global recession, but it is worth pointing out some of the more direct effects of this situation on the publishing world. First of all, uncertainty and recessions always kill advertising budgets. Companies take out fewer ads, magazines that rely on ad revenue suffer, and the whole publishing industry slows down. This is especially true in conglomerates that consist of a publishing house, a newspaper, TV network, etc. The media is fueled by advertising dollars, and the lack of advertising could send shockwaves through the publishing industry, on the balance sheets at particular companies, and in terms of further reducing outlets for reaching readers.
I’ve heard off-the-record stories about magazines being in serious financial trouble, and I’ve heard of publishers drastically cutting their list in preparation for tough financial times. None of this bodes well for literature, much less literature in translation.
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The most frightening news of recent times involves the Borders chain. In March 2008, Borders put itself up for sale and had to borrow $42.5 million Pershing Square Capital Management. Borders couldn’t find a buyer, and as a result, had to issue warrants to its largest shareholder, giving Pershing Square even more control of the company. And if that wasn’t bad enough, along comes the financial collapse, and Borders Group Stock falls from $7.80 to $2.44.
In November 2008, Borders issued a memo to Independent Publishers Group, stating that Borders would “not be paying [IPG] for two months due to anticipated excessive returns.” Borders claims to have cash on hand and access to credit, but this is a very frightening message for the entire book world, sending a message about Borders long-term stability. And of course, the independent presses are the first to have to deal with this non-payment . . .
If Borders were to go bankrupt—and this is still an if—it would be one of the greatest catastrophes to hit the publishing world in decades. Even after liquidating as much stock as possible, publishers would receive massive returns, millions of dollars would be lost, and going forward, publishers would have 1,100 fewer stores to sell to.
Even worse, without a Borders store next door, a lot of B&N outlets would become superfluous. B&N could easily close down a number of stores to improve their financial standing, reducing sales outlets even further.
A lot will depend on the upcoming holiday sales season, about which there have been