Hope you enjoy this video we just made to describe my passion:
Facebook group embarrasses Borders (US) into starting “industry-wide dialog” about ending returns
January 25th, 2010Hey, did you know that a Facebook group www.donatenotdumpster.org started by some upset Waldenbooks employees may have started the ball rolling to end publishers providing books to bookstores on a returnable basis? This could be HUGE: a paradigm shift in publishing.
The group was started to protest the dumpstering of unsold books as Borders Group begins shutting down its Waldenbooks stores. “Why not donate them to libraries and charities?” they ask.
Over 2,000 people were signing on per day as the word spread virally. Many posted messages that they will boycott Borders if it doesn’t donate the books.
Last week, when Borders execs responded by saying it wasn’t their fault because everyone does it (destroying books, especially mass market books), that didn’t appease the group members who started questioning why there is such a wasteful system in the book industry. The organizers did some research and found my website called www.BookIndustryBailout.ca where I present an analysis that billions of dollars are wasted every year because of returns – so they began emphasizing ending returns across the industry as a goal. Meanwhile, more consumers are joining the Facebook group and signing online petitions.
On Saturday, the Washington Post highlighted the Facebook group in an article titled “Consumer complaints have companies rethinking how to dispose of unsold inventory,” by Ylan Q. Mui.
Borders execs seem to be squirming under this heat. One of them sent out a mass email (damage control on a Sunday at 11:05 am!) to people who had emailed Borders’ head office with protest notes. Her email says:
Thank you for contacting Borders. We take seriously the many suggestions we
have received regarding product donations.
- We have a new relationship with Gifts In Kind International and all unsold items that we cannot return to publishers will be donated to local charities (you can read the news release here:
http://www.borders.com/online/store/BGIView_irnewsreleases — click on the “Other Borders News” right below the Keyword Search box).- We will have all of our stores recycle product instead of disposing of it.
- We have started a dialog within the publishing industry to address industry wide practices – which all book retailers practice, not just Borders – that could possibly be changed with positive impacts on communities and the environment.
Sincerely, Mary Davis, Borders Group
It is part #3 that could be huge. I’m optimistic. How about spreading this news? If more consumers and people within the industry added their weight to the pressure, that might be incredibly helpful. At minimum, indie publishers might want to be included in the “dialog within the industry.”
Thanks for spreading the word,
cheers, Bruce
Duthie Books in Vancouver latest victim of bad business model
January 21st, 2010Canadian newspapers are reporting the scheduled closing of Duthie Books in Vancouver. As many comments at the Vancouver Sun newspaper website have pointed out, there was a significant lack of business sense at Duthie Books. Yet we needn’t single this store out: the entire book publishing sector is operating on a broken business model. McNally Robinson just closed two of its four stores.
Unlike other retailers who buy at about 50% off retail price, bookstore owners buy at only 40% off. How can they expect to be profitable? Why don’t the store owners read some of those business how-to books they stock?
The rationale for this poor margin is because the books are acquired from publishers on a “returnable” basis (i.e. on consignment). So bookstore managers merrily overstock and pay for shipping both ways on stock they don’t immediately sell. Instead of getting their stock at a better margin, and marking it down if it doesn’t sell at full price, they are stuck to this bizarre returnable practice like deer caught in the headlights.
This antiquated process is bankrupting not only booksellers, but distributors and publishers, too. Meanwhile the Canadian and provincial governments are handing over tens of millions of dollars annually to subsidize losses by incompetent executives.
It isn’t Kindle that is the biggest threat to bookstores, it is the reluctance to demand a reasonable business arrangement from publishers. The toll this inefficiency is costing the Canadian book industry? Over $300 Million each year. Check out the analysis at www.BookIndustryBailout.ca
thanks!
McNally Robinson in receivership is more proof of broken business model
December 30th, 2009Bookseller McNally Robinson is in the news today for entering bankruptcy protection, with plans to close two of its stores (Toronto and Winnipeg-Polo Park) while maintaining its Winnipeg-Grant Park and Saskatoon stores. Book publishers will likely lose millions in the receivership settlement. Newspaper columnists are citing ebook and internet sales as major factors in MR’s problems.
Overlooked by most analysts is the systemic problem haunting the bookselling sector: retailers pay too much for the product. Retailers in other sectors generally buy at 50% of retail. Yet most booksellers buy at 60% of retail. Hard to be profitable when you leave that much margin on the table. It is a broken business model that was bound to catch up when times got tougher. (Some of the big box stores, Indigo-Chapters and Amazon do pay less than the independent retailers — that explains in part why they can sell at discounts.)
Why do booksellers pay so much? The rationale within the publishing world is because the books are bought by the retailer on a “returnable basis” (i.e. unsold copies can be shipped back to a distributor for an exchange credit or refund). In essence, books are sold to retailers on consignment, even though most titles have a clear ’shelf-life’ when they can be sold at full-price.
Overall, this practice of selling on consignment and at poor margins is costing the Canadian book industry (publishers and retailers) over $300 MILLION every year in inefficiency. [This is also an environmental nightmare with about half of all the books printed ending up unsold.] By comparison, eBook sales likely haven’t amounted to $3 million this year in Canada. Inefficiency within the industry is 100 times more important than ebooks.
It is so sad that McNally Robinson is closing stores instead of demanding a better and more sane arrangement with publishers. And very sad that Canadian publishers will be stuck with unpaid invoices, when they could have improved their own profitability by ending consignment sales. And sad too for the Canadian taxpayers who will likely be coughing up millions to prop up Canadian publishers (again) when those publishers and retailers really need a slap up the side of the head to fix their basic business practices.
- Bruce Batchelor, publisher
Agio Publishing House, Victoria, BC, Canada
Hooray! More signs of a royalty-collecting agency for writings on the Internet
December 7th, 2009Musicians, composers and music producers (“content providers” or “rights holders”) have long enjoyed a huge benefit over creative folks who are writers and illustrators. This advantage is the existence of strong rights agencies who levy performance and usage fees – even a restaurant owner who plays the radio must pay an annual fee – and then divvy up the money to musicians. Some of the money can be attributed to a specific song, while other money is apportioned out to all musicians.
According to a NY Times article today, “GEMA, the main collecting society for German music copyright owners, raises more than €850 million, or $1.3 billion, a year.” The cool thing is the scale of this: perhaps $100 BILLION are being collected worldwide by the national rights agencies.
So far, the rights agencies for written content have been comparatively anemic – my ballpark figure would be 10% as effective in terms of dollars raised and disbursed. In the USA, my writings are included in Copyright.com (the US Copyright Clearance Centre). In Canada, our authors register with AccessCopyright.ca. Through reciprocal agreements, AccessCopyright receives money from (and collects money on behalf of) copyright licensing bodies in the UK, Australia and dozens of other countries.
This all sounds good, but what’s needed is more robust enforcement, especially across the Internet. There are reasons to be optimistic about this happening:
- Germany (according to the same NY Times article (Publisher Lays Out Plan to Save Newspapers) will be enacting new legislation to set up a rights monitoring and collection agency for newspaper content used on the web; this sets a good example for other (non-newspaper) written content,
- as part of the Google Books settlement, a rights agency will be established for book content, and for the first time, nearly all authors will be represented by an agency, and
- micropayments (fractions of a cent in some cases) are feasible because computer processing has become so inexpensive – we could envision, for example, someone happily paying a dollar to browse through 300 book pages while doing research, or Google paying a portion of its ad revenues generated from searches of book pages. Micropayments would enable easy legal usage by consumers, and make the alternatives (piracy, not using the material, etc.) less attractive.
Meanwhile we can be happy and thankful about receiving our annual cheques from AccessCopyright, and dream of more and larger payments.
Environmental madness from Sarah Palin – but David Suzuki, too?
December 4th, 2009Sarah Palin and David Suzuki. Both bestselling authors. One can expect shoddy environmental practices from a US politician/celebrity who can’t figure out how dinosaurs existed before Adam & Eve, but did anyone think superstar Canadian environmentalist David Suzuki would also be contributing to wanton waste of natural resources and the release of megatonnes of greenhouse gases?
The common link – and alleged indiscretion – is both celebrities’ books are being published by companies who sell books to retailers on a consignment basis. Within the book trade the practice is called “selling on a returnable basis.” Unlike electronics, groceries, clothing and most other consumer goods, unsold books can be returned to the manufacturer for refund or a credit. Despite sounding environmentally friendly as if it were one of the good Rs, ‘returnable’ selling has been linked to massive overprinting of books and the associated extra warehousing, transport and other costs. Across the industry over 40% of all copies printed are never sold, and subsequently discarded. In some mass market genres, the waste is in the range of 80% to 85%.
Dr. Suzuki’s books are published through Greystone Books of Vancouver, an imprint of Douglas & McIntyre. On the surface all seems gloriously green: Greystone makes this environmental statement on its website: “Reflecting its commitment to protecting the environment, Greystone uses ancient-forest-free, chlorine-free, 100% post-consumer paper in the majority of its books.”
Ex-governor Palin’s publisher is the giant HarperCollins, which recently increased the number of copies in print of her book “Going Rogue” to 2.5 million on the strength of early sales of 300,00 copies. Although sales have now purportedly broken the 1 million mark, Palin’s book could have 1.5 million copies headed for the pulping bin.
The website www.BookIndustryBailout.ca pegs industry waste at over $300 million annually for Canadian publishers, and over $3 billion annually in the USA. Analyst Bruce Batchelor believes the book industry is, “shooting itself in the foot, losing about 20% of gross revenues to this wasteful and totally unnecessary inefficiency. No wonder publishers and booksellers are going broke left, right and center.”
Jeffrey Trachtenberg of THE WALL STREET JOURNAL wrote, “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.”
Consignment selling of books in Canada is blamed for over 50,000 metric tonnes of carbon dioxide, although the real figure might be “as high as 200,000 tonnes,” according to Batchelor, who says he is a big fan of Suzuki. “But on this issue, he’s definitely on the wrong track and losing credibility fast. Using recycled paper is good, but selling on consignment is so wrong.”
Selling eBooks: my crystal ball gazing
November 24th, 2009This week’s news reports revealed that Amazon’s Kindle store will pay Smashwords 42.5% of the retail price for eBooks that Amazon sells. Usually Amazon only pays 35% to publishers. Smashwords is an aggregator of content — which means it operates like a distributor or wholesaler does for printed books, by selling the product to other retailers on behalf of ‘content providers’ who may be publishing houses or even individual authors.
Since Smashwords is contractually obligated to pay 85% of its revenue to the publisher, we can assume that Smashwords itself will receive 50% from Amazon. I wouldn’t be surprised if 50% or better is already being offered to larger publishers, distributors and other aggregators.
My sense is that we’ll see a steady eroding of Amazon’s margin as Barnes & Noble and hundreds of others begin competing more strongly to get into the eBook sales game. Where it will end is anyone’s guess, but I don’t see much ‘customer loyalty’ involved because the web makes it so easy for the public to obtain the optimum price from any hole-in-the-wall outfit that offers a better deal on the identical product. So if Amazon wants to charge $9.99 and give the publisher $3.50, expect to see someone else offering the publisher $4.00 and selling for $4.99! Then someone else offers publishers $4.25 and sells for $4.79, etc.
Selling eBooks is the ultimate in easy commerce: no staff, no inventory, no personal service, only databases talking to other databases, low set-up costs, no barriers to entry, only ‘cash’ sales… So there will soon be hundreds, then thousands, of competing vendors. They will shrink their own margins as they compete, heading to near the ‘break-even’ mark, which I feel is only a few pennies above the wholesale price of publishers/aggregators, plus credit card costs.
My hunch about the long-term situation? Publishers (at least the bigger ones) selling eBooks and audiobooks directly from their own sites (Harlequin is already doing this), with smaller publishers selling through cooperatively-run (or at least sympathetically-run) e-stores. Plus thousands of e-vendors, none of whom dominate the marketplace, like Amazon and Barnes & Noble have for printed books.
The wild card? Google. They could set up their own store and direct search traffic there. What may hold back Google is its worries about ‘monopolistic practices’ — it doesn’t want the Feds to crash its merry, highly-profitable party.
Ending returnability will save Canada’s book publishing industry over $330 million per year and end senseless waste of natural resources
July 23rd, 2009The book industry is in dire straits — more publishers and retailers are going bankrupt every week. Massive lay-offs are happening. The pressures seem to be coming from every direction: the recession causing lower sales in stores, digital books threatening to erode sales of printed books, the cost of printing rising… Yet the best hope for regaining profitability is to FIX AN UNDERLYING BUSINESS MODEL that is hopelessly inefficient and scandalously wasteful of money and natural resources.
A simple change could be implemented within six months, and would save the Canadian book industry over $330 MILLION each year. All that’s required is for publishers to stop providing books to retailers on consignment (“returnable”) terms, and also grant booksellers a discount similar to other industries.
There’s a huge environmental component to this story — fantastic amounts of resources are wasted and pollution caused by overprinting tens of millions of books, transporting them back and forth across the continent, and processing the waste.
Please go to www.bookindustrybailout.ca to learn more. Thanks for watching the following video and for doing what you can to build awareness and bring pressure to bear on publishers and retailers.
$330 million bailout for Canadian book industry
June 17th, 2009Canada’s book industry is in dire straits — as are the book industries in other countries. It is my hope that this moment of desperation will also be a time of inspiration and wise leadership by the CEOs of the largest retailers and publishing companies.
The new website www.bookindustrybailout.ca outlines how to save hundreds of millions of dollars while also greatly reducing greenhouse gas emissions.
Please go to that website to read about the solution.
thanks, cheers,
Bruce