I found this of interest.

Douglas Clark, Bath, Somerset, England .... 
 http://www.dgdclynx.plus.com
----- Original Message ----- 
From: "MrPepper11" <[log in to unmask]>
Newsgroups: rec.arts.books,sci.econ,alt.politics.economics,misc.consumers
Sent: Friday, June 03, 2005 7:24 PM
Subject: Publishing: An Industry 'Gone Mad'


> June 3, 2005
> Quest for Best Seller Creates a Pileup Of Returned Books
> Hoping for a 'Da Vinci Code,' Publishers Flood Stores; An Industry
> 'Gone Mad'
> A Trip to the 'Sad' Warehouse
> By JEFFREY A. TRACHTENBERG
> Staff Reporter of THE WALL STREET JOURNAL
> 
> There are two Time Warner Book Group warehouses on the outskirts of
> Indianapolis. Although separated by only an eighth of a mile, between
> them stretches a gulf of disappointment.
> 
> One building, dubbed the "happy warehouse" by one publishing executive,
> is filled with about 60 million hardcover books and paperbacks waiting
> to be distributed to stores across the U.S. The other is the "sad"
> warehouse. Piled high are some of the 20 million books returned every
> year by retailers. Many will be resold at cut-rate prices. Two million
> to four million will have their spines sliced off before being piled
> into a recycling machine the size of a Dumpster, chewed up and spat out
> as bales of paper.
> 
> Returns are the dark side of the book world, marking not only failed
> expectations, but the crippling inefficiencies of an antiquated
> business. It's a problem that's only getting worse. The industry's
> current economic model pushes publishers to generate a small number of
> blockbuster hits. But picking winners is a quixotic enterprise, and as
> publishers ship an ever-increasing number of books to stores, hoping to
> hit the jackpot every time, stores are sending an ever-increasing
> number back.
> 
> In 2003, 34% of adult hardcover books were returned to publishers,
> compared with 28% in 1993, says Albert N. Greco, a professor at the
> Fordham Graduate School of Business and a leading industry
> statistician. That's more than one in three adult hardcover books that
> publishers edit, print, distribute and market. According to the
> Association of American Publishers, those returns in 2004 had a
> wholesale value of $801 million, up from $743 million in the prior
> year. It is a system nobody likes, but no one knows how to change, even
> though the country's largest book retailer says it would like to try.
> 
> In most other industries, manufacturers don't have to take back
> products that don't sell. If a department store can't move a line of
> clothing, for example, the items are pitched at lower prices. The book
> industry, by contrast, has been saddled with this system since the
> Depression, when publishers told struggling bookstores they could
> return unwanted books as long as they kept ordering new titles. Returns
> also persist in the DVD and music businesses, and to a lesser extent in
> videogames.
> 
> The reverse tidal flood of books hurts every aspect of the business,
> one already struggling with weak sales. Authors don't get royalties on
> unsold books. Publishers sell returned copies at distressed prices
> after paying to truck them thousands of miles around the country. Books
> that can't be sold at any price are pulped for a total loss. "The most
> expensive thing we do in our warehouse is process returns," says John
> Sargent, chief executive officer of Germany's Holtzbrinck Publishers,
> which owns such imprints as Farrar, Straus & Giroux; Henry Holt and St.
> Martin's Press.
> 
> Worst of all, the increasing rate of returns has helped ignite a
> destructive cycle. So many books come back that publishers say they
> have raised prices to compensate for the anticipated lost revenue. That
> in turn makes many books harder to sell, creating more returns. Between
> 1985 and 2003, hardcover book prices rose 118%, far outpacing the 71%
> gain in the Consumer Price Index during that period, according to
> Fordham's Mr. Greco.
> 
> Last October, Time Warner Inc.'s Warner Books published Nicholas
> Perricone's "The Perricone Promise," a book about staying young. It
> sold 525,000 copies, hit the major best-seller lists and was one of the
> publisher's hot books of 2004. Retailers sold about 70% of the book's
> print run. That's a standard performance for such a title but it means
> that 225,000 copies remain unsold. Publishers and retailers will pay to
> truck these copies thousands of miles around the U.S. -- without once
> selling them to a consumer.
> 
> Time Warner initially shipped a number of copies 2,100 miles from its
> "happy" warehouse in Lebanon, Ind., to a Barnes & Noble Inc. bookstore
> in Marina Del Rey, Calif. Those that remained unsold were taken into a
> back room, packed in a box -- which was picked up by a trucking company
> -- and dispatched on a 2,800-mile journey to Barnes & Noble's national
> distribution center in Jamesburg, N.J.
> 
> Barnes & Noble processed the books and sent them a further 700 miles
> back to Lebanon, where this time they went to the "sad" Time Warner
> warehouse. There they remain. After 12 to 18 months, these copies will
> likely be sold to companies that specialize in bargain books.
> 
> Time Warner, for example, sells many returns to Strictly-By-The-Book
> Inc., which has a warehouse in Bridgewater, Mass., about 1,000 miles
> away. Barnes & Noble says it plans to buy bargain-priced copies of "The
> Perricone Promise," which it will eventually sell for as much as $7.98
> instead of its original list price of $27.95. That means they will
> probably wend their way back to Marina Del Rey, via Bridgewater and
> Jamesburg, for an additional 3,000 miles on the road.
> 
> The escalation of the returns problem began when book chains became
> superstores and expanded the size of their orders. In one decade,
> between 1989 and 1999, Barnes & Noble went to 542 from 23 superstores
> and Borders Group Inc. to 300 from seven. At the same time, discounters
> such as Wal-Mart Stores Inc.'s Sam's Club and Costco Wholesale Corp.
> emerged as book powerhouses. These stores sell a few hundred titles in
> massive numbers and constantly replace slow-selling books with newer
> titles.
> 
> This kind of retailing has led to an ever-shortening shelf life for
> bestsellers. Most stores promote new books for only one or two weeks.
> Authors who might have remained on the best-seller list 10 to 12 weeks
> a decade ago now often stay only six to eight weeks. This phenomenon
> has been exacerbated by publishers themselves, who are publishing ever
> more books each year in search of hits. That pushes other titles off
> the shelves more quickly.
> 
> Because potential bestsellers have only a short time to get
> established, publishers say they need towering stacks at the front of
> stores to ensure their titles get noticed and to make sure they don't
> miss any sales. The principle is similar to movie studios wanting to
> get their films in as many theaters as possible on opening weekend.
> "You build authors by the weight of copies," says Laurence Kirshbaum,
> CEO of Time Warner's book group.
> 
> This means printing ever larger quantities. A publisher who wants to
> supply an average of 25 copies to the 690 superstores that Barnes &
> Noble is expected to operate by year end -- typical for a book with
> best-seller potential -- will have to ship 17,250 copies to that
> company alone. In 1985, Warner Books printed a total of 35,000 copies
> for "Word of Honor," the first Nelson DeMille novel it published.
> Today, Warner Books typically prints 800,000 copies of a new DeMille
> offering.
> 
> The ultimate fantasy: Finding a book like Dan Brown's "The Da Vinci
> Code," which now has more than 10 million hardcovers in print in the
> U.S.
> 
> Even midsize publishers sometimes reach for the brass ring. In April
> 2004, Avalon Publishing Group Inc. issued, "The Politics of Truth:
> Inside the Lies that Led to War and Betrayed My Wife's CIA Identity,"
> by former U.S. Ambassador Joseph Wilson. At the time, books about
> politics were selling well, and Avalon, eager to deliver as many copies
> as quickly as possible, printed 100,000. Shortly before the publication
> date of April 30, it went back to the presses for an additional 25,000.
> 
> Just as the book was hitting the best-seller lists, public attention
> switched to allegations of abuse at Iraq's Abu Ghraib prison. Although
> "The Politics of Truth" enjoyed good sales, Charles Winton, Avalon's
> CEO, says he's now sitting on 60,000 copies, including many that have
> been returned. The second printing cost at least $60,000, he says, none
> of which he has yet recouped. Mr. Winton says he had to gamble: "You
> sell a lot of books, but there's also a lot of waste."
> 
> At the beginning of each month, Brian Wakeley, who heads up the returns
> department at Powell's Books in Portland, Ore., runs a computerized
> inventory review to determine which books haven't sold in the last six
> months. After deciding which titles need to be shipped back, Mr.
> Wakeley contacts all eight stores in Powell's chain and asks them to
> send their copies to the retailer's distribution center in Portland.
> 
> There, employees manually scrape off the Powell's barcode label on the
> back of each book. The staffers, who work in shifts, use a plastic
> scraper that looks like an inverted spoon. The work is so boring that
> "some people just can't stand it," says Mr. Wakeley, who listens to
> books on tape as he works.
> 
> Retailers, who pay millions in freight and handling for returns every
> year, have mixed feelings for the present system. "There is no doubt it
> gives us too much confidence," says Gregory P. Josefowicz, CEO of
> Borders Group, the nation's second-largest book retailer. "Without that
> umbrella, we might be more analytical" in what books are bought.
> 
> Steve Riggio, CEO of Barnes & Noble, the U.S.'s No. 1 bookstore chain,
> says he has a solution: He wants Barnes & Noble to start marking down
> books and selling them on the spot. Customers would relish the
> bargains, publishers would generate more sales and costs would be cut.
> He says eliminating returns would "revolutionize the book business and
> revitalize the book business."
> 
> But Mr. Riggio says he can't implement the change by himself, since
> it's ultimately a decision for publishers. "We'd like to see this
> practice discontinued," he says. "Any rational business person looking
> at this practice would think the industry has gone mad."
> 
> Though they stand to benefit, many publishers are leery of change.
> Cynthia Sherry, associate publisher of the Chicago Review Press, a
> small independent house, says that without the return option,
> bookstores won't take chances on the quirky, edgy books her company
> publishes.
> 
> Others worry that readers will learn to wait until books are cheaper.
> "You don't want to create a discount atmosphere," says Robert Miller,
> president of Walt Disney Co.'s Hyperion book-publishing unit.
> 
> Years ago, one leading publisher tried to change the system but nobody
> followed his lead. In 1980, the late William Jovanovich, chairman of
> what was then Harcourt Brace Jovanovich Inc., announced he was ending
> returns. Instead, he offered retailers larger discounts. Buyers
> responded by cutting their orders. Mr. Jovanovich reversed course a
> year later when retailers demanded even deeper discounts on the grounds
> that buying books on a nonreturnable basis was still too risky.
> 
> Thomas F. Burke, founder and president of Pomegranate Communications
> Inc., a small book and calendar publisher, says he's willing to try
> again. The Petaluma, Calif., company decided late last year it won't
> accept returns anymore. "The system doesn't work," he says. "I'm
> looking forward to having a clean warehouse."
> 
> Still, Mr. Burke is doubtful his decision will prompt changes in the
> business. "It won't create a ripple," he says.
>