Bismarck said that it is unwise to look too closely into the way we make our laws or our sausages. You may be able think of some other things that don't bear up too well under intense scrutiny. High on my list is what publishers
, particularly mass-market paperback publishers, have to do these days to get their merchandise displayed in and promoted by bookstores. It might be described as publishing's dirty little secret, except that it's not so little. In fact, it's become so pervasive that it touches everybody in publishing, even though not everybody is aware of it yet.
In fact, not everybody wants to know about it. Some years ago a friend of mine, a top-notch paperback salesman, phoned me to tell me he had just been hired by a hardcover publisher to launch its mass-market paperback line. "That's great," I said. "In eight weeks you'll be back on the street looking for another job."
"What do you mean?" he gasped.
"I don't think your boss wants to know what you have to do to get paperbacks sold. When he finds out, he'll want no part of it."
He reflected for a moment, "Yeah, well, it does get kind of nasty out there. And this man's such a gentleman . . ."
"That's why I give it eight weeks."
In due time he phoned me again, "You were wrong. It wasn't eight weeks. It was seven."
One of the things my friend's former boss didn't want to know about is exemplified by a good news-bad news story told to me by another publisher, the head of a small hardcover house. It happens that he was about to publish a celebrity biography and was pitching it at a bookstore chain. "We love it," the buyer said to him. "In fact, we'd like to do a feature piece about it in our promotional catalog."
"Wonderful!" said the publisher.
"It will cost you $7,500," the buyer said to him.
The publisher reeled with shock—but he ended up paying the $7,500. Why? "The alternative," he said, "was worse,"—meaning that had he not paid it, he was afraid that the chain would not carry the book.
This good news-bad news story is anything but a joke, for such experiences are common among publishers today. With far more books published than there is bookstore space to accommodate them comfortably, the struggle for advantage has driven publishers to resort to desperate and sometimes dubious measures. Just how dubious they are may be inferred by the number of publishing people who refuse to talk on the record about them. Although none stated that these measures are corrupt, neither could any deny that there is a bad aroma in the air around the book retailing business.
Paperback publishers and chains are locked in a serious predicament. Most publishers readily admit that there are too many books published. But none of them is willing to cut back on hard-won rack space. Rather than sacrifice that space, they fill it monthly with midlist genre titles, unnecessary reissues, and nonbooks that many bookstores feel they could easily live without. If publishers ever gave up that space, voluntarily or otherwise, they would lose a slot they might urgently want back one day to fill with a major release
.
The problem is particularly acute in the chain stores that do not specialize in books, such as merchandise and food marts, where book racks compete for space with breakfast cereal, toilet paper, or automobile products. There, a small number of slots is allotted for the hundreds of titles issued monthly. With so many books funneling into the space available for only one, something has to give: either fewer books will be displayed, or books will be displayed for a brief time so that all titles can get a week or two in the sun. In most nonbookstore outlets, the latter solution is impractical, and so books remain on display for one month. But which books? How are the finalists per month selected (fewer, actually, because so-called superreleases often take up more than one slot)? Well, as buyers for those stores are not particularly sophisticated about books, it should not be surprising that they often respond to the publisher offering them the most alluring inducements to stock a title.
The larger bookstores and bookstore chains do have more space to accommodate the monthly flood of books. For these retailers, then, the problem is not space but rather time and attention. A publisher wants to see its books carried in a store for eight weeks and displayed in the front where they catch the attention of browsers. Unless some kind of deal is proffered to the store, however, the unfit titles will survive on the shelf for a week instead of a month or two, particularly if they are not bylined by star authors. Books by stars usually get all the time and space they need; they sell themselves without a major investment of time and energy on the part of bookstore personnel. It's on the level of secondary books that the war is fought.
To overcome the problems of inadequate display space or inadequate display time for those books, publishers have developed the means to equalize the survival rate. One technique is to pay wholesalers a "slotting allowance" to carry certain titles on their shelves, to display them more prominently, or to promote them as bestsellers.
Another technique is to offer stores incentives in the form of extra discounts as a reward for meeting certain purchase quotas. These discount schedules are issued to all stores and are supposed to be applicable to all without favoritism. However, when deciding between an independent bookstore or small chain that can buy a small number of copies of a given title, and a giant chain that has the capacity to purchase many thousands, it is understandably hard for a publisher to refrain from offering a little something extra to the big buyer. Such discriminatory practices were asserted to be in restraint of trade in a legal action brought against several major paperback book companies by the Northern California Booksellers Association in the mid-1980s. Although the suit was settled, and the publishers have modified their discount schedules to make them equally accessible to all bookstores, the pressures that created the discriminatory practices haven't changed one bit, and revised discount policies may still be favoring the larger store chains. And the offering or soliciting of secret discounts is by no means unheard of, according to some sources I have interviewed.
Another area where ethical distinctions become blurry is the bookstore catalogue. In order to push their merchandise, independent bookstores or store chains issue a variety of promotional literature to the trade and to consumers. Obviously, not all the titles described in that literature will be afforded equal treatment: the ones that the publishers or stores are hyping will get featured coverage. Such coverage is expensive, however, and the stores cannot be expected to bear the load unsubsidized.
Most publishers do not begrudge stores a reasonable contribution to the production costs of catalogs. But some feel that the charges go beyond reasonable. It is impossible to determine whether or not this is so. For example, one recent bookstore chain rate card, issued to publishers in connection with its Preferred Reader Program—a sort of book club offering discounts and other benefits to members—invited publisher participants to pay $50,000 for a "top tier" in the Preferred Reader guide that the chain was to send out before Christmas. For that sum, a title would be one of ten books featured on a page in the Guide, get front-of-store display, and receive featured treatment in radio and newspaper ads. Was it worth $50,000 or more in sales to the publisher? If not, the publisher was free to elect a lower tier in the chain's program. On the fifth tier, for instance, $6,500 paid for a title to be one of fifteen on a page in the holiday catalogue but nothing more. Indeed, a publisher could elect not to feature a title in the catalogue at all—and risk being frozen out of all but the diminishing number of independent bookstores.
This very viewpoint was expressed to me by a publisher, who said, "The principal intent of these charges is not to sell books, it's to make a profit for the chains. Better than 50 percent of the time, advertising in a chain catalogue is not the way a publisher would spend his money if he had a choice. But we don't have a choice, and that's where we cross the line between voluntary co-op advertising and . . . well, maybe you can think of a polite way of putting it."
Although the large bookstore chains may not be all-powerful, it is nevertheless extremely intimidating to challenge them, and if you try, you'd better have some heavy artillery. One executive of a hardcover house told me about an experience he had when trying to line up a featured Christmas catalog position for a forthcoming book by a major bestselling writer. "They told us it would cost $26,000, and we told them to go to hell. They implied that they might not carry the book. We said fine, their competitor across the street will carry it. When they realized that they needed us as much as we needed them, they proposed a compromise. Some compromise! We took a smaller, cheaper ad in the catalog. But it did save face all around. I don't think we would have been so daring if the book hadn't been so important."
Chain-store people feel that the catalog issue is misunderstood, and they claim that they are actually doing publishers a favor by channeling money into catalog displays. They reason as follows: trade publishers contribute co-op advertising money to bookstore chains. They declare their co-op policies in writing. This money may either be applied to the cost of book ads in newspapers, or to anything else that will have the equivalent effect of an ad. And some chains feel that a feature in their catalogue, which is distributed to many thousands of accounts, is as effective as a couple of $10,000 or $20,000 ads in the
New York Times, and maybe more. And even when stores or store chains do agree to take out a co-op book ad in a magazine or newspaper, the benefit often inures more to the publisher than to the sponsoring store, for consumers are attracted to the book in that ad, not necessarily to the store. Furthermore, print advertising space is usually cheaper for retailers than it is for publishers. By laying out the cost of the co-op ads, the stores confer a tremendous savings upon the publishers—a savings that publishers ill reward by settling their co-op bills very slowly, according to one store executive.
Another, and equally disturbing, practice requires publishers to pay bookstore chains a fee for the use of shelf space. It was originally developed by food and other merchandise chains. New manufacturers, or manufacturers attempting to distribute new lines and products, are charged what might be called an entry fee by the chain stores in order to guarantee that those stores will stock and display the merchandise. Although book distribution, particularly paperback book distribution, has never been one of the more savory branches of the publishing business (it's an offshoot of the trucking industry), the application of food-store chain "slotting allowances" to books today has been made possible by the rise of the enormous wholesale and retail bookstore chains in the last few decades.
Before we hasten to judgment, I should state that I was told that this concept was introduced not by the chains but by publishing executives seeking a competitive edge, and much of the initiative continues to come from publishers. ("How the hell do you think my books get on the shelves—jump up there by themselves?" one publisher growled at me.) But even if publishers do take the lead, the chains do not exactly mount vicious resistance. What is more likely is that publishers and booksellers are now locked in a nasty cycle of mutual inducement (there: I did find a polite way of putting it). It's a cycle from which no one is sure he wants to be released. "It's a terrible situation," one independent bookseller joked, "How come we're not taking advantage of it?"
In any event, today, slotting allowances are accepted as a necessity of doing business. New publishers, or publishers starting new lines and imprints, are confronted with the necessity of paying for the privilege of having their merchandise attractively positioned, or positioned at all. Publishers are often charged for dumps and other displays and for front-of-store positioning.
A typical example is a "Wholesaler Incentive Plan" offered by one paperback publisher. Among a variety of inducements offered in this letter to wholesale accounts is a schedule of payments to be made for positioning certain titles on the stores' bestseller list:
- 25¢ per copy to assist you in promoting the book slotted in your top
- 1 through 5
- 15¢ per copy to assist you in promoting the book slotting in your top
- 6 through 10
- 10¢ per copy to assist you in promoting the book slotted in your top
- 11 through 15
- 5¢ per copy to assist you in promoting the book slotted in your top
- 16 through 20
The books thus promoted actually go on a bestseller list: not the
Publishers Weekly or
New York Times bestseller list, but a distributor's bestseller list, similar to a food chain's weekly features. Store customers will thus see racks of "bestsellers" that do not necessarily have anything to do with nationwide lists. But the positions on those lists have been paid for with cash, and from the publishers' and stores' viewpoints, a bestseller is a bestseller.
Chain store and wholesaler spokespersons do not consider any of this unusual or alarming. They take the position that if a publisher thinks its book is terrific, let that publisher back up its claim with hard cash. One publisher did just that, and was therefore able to elevate a midlist author into a bestselling one. "As brutal as the system may be," he says, "in his case it worked. Ask that author if he thinks the system is unethical!" This may be a shortsighted attitude, however, because it does not take into account the financial and other tolls that fall upon publishers, consumers, and, ultimately, writers.
The dangers inherent in the practices I have described compelled the late Roberta Grossman, then publisher of Zebra/Pinnacle Books, to speak out in an article in Magazine and Bookseller, a publishing industry trade publication. This is the only instance I know of when a publishing person has gone on record on these matters, and if an executive of Zebra, a company that is no slouch in the aggressive marketing of its books, speaks out in concern, there is a great deal for the rest of us to be concerned about, too:
"Every time a publisher buys a book, he is putting his money where his mouth is in terms of investing in artwork type, printing, paper, promotion and advertising, to say nothing of shipping and such essential nonessentials as foiling and embossing, and really absorbing the entire financial gamble. All he asks in return is an opportunity to get his product displayed and give it exposure to the public, which has the final say on whether of not his bet will pay off. If our major accounts begin to have so much say in what we can distribute, and because of that, in what we ultimately publish, there is no doubt we will see an end to the excitement generated by new porducts and new talent."
These practices threaten the book industry and writing profession in many ways. For one thing, they intensify the financial pressures on smaller publishers. The house that cannot afford to pay a chain store for featuring its lead novel in the store's catalogue or for displaying that novel prominently will be at a comptitive disadvantage. So far, according to one publisher, the smaller houses have responded to the pressure by simply raising the prices of their products. But there is obviously a limit to how much a publisher can charge, and it only postpones the day of reckoning in the paperbook jungle. Meanwhile, the consumer absorbs the cost of bookstore positioning, promotion, and display, and higher book prices only force publishers to pay even more money for star authors whose bylines justify those prices.
Thus, the public pays in another way, for the quality of our literature must eventally suffer as publishers gravitate toward the safe, the familiar, and the formulaic. "Small- and medium-sized companies, often hotbeds of creativity, will vanish, or even worse, never come into being," said Zebra's Grossman. "New authors just won't be given a chance. The tried and true, the old and established will rule—with no successors on the horizon as tastes change or consumers demand something new and different. . . . Whether in the form of slotting fees, trade allowances, or co-op money, this system can only lead to a 'homogenization' of paperbacks, with only 'brand names' and 'safe' titles monopolizing shelf space."
When I was younger and worked for my father during summers in the garment business, I had many opportunities to observe how the wheels of that industry were lubricated. Payoffs and extortion were as common as the pushcarts that crowd the garment district's streets, and very little got done without somebody "shmearing"—the Yiddish word for paying off—somebody else. And after I entered publishing I had reason to feel good about my chosen profession after learning about corrupt practices in such related fields as the movie and record businesses. Perhaps because business on the editorial level is conducted on such a civilized plane, we have come to believe that the same degree of refinement applies down the line in the marketplace where the merchandise is moved. It is somewhat disconcerting, therefore, to learn that such elegant phrases as "sales incentives," "slotting allowances," "co-op contributions," and "display fees," may be euphemisms for something more akin to what was done in the garment business than to the way ladies and gentlemen conduct business upstairs in Editorial.
A bookstore executive to whom I mentioned the analogy pointed out some critical differences. Whereas the list prices of books are printed on the covers, the retail prices of garments adjust themselves in reaction to marketplace conditions. With much wider profit margins available, garment manufacturers have elbow room in which to merchandise their products that book publishers simply do not have. Above all, garment manufacturers do not have the blood-draining problem of returnability that book publishers and retailers have.
We must, therefore, not rush to judgment. The conditions down in the pit are responses to market forces beyond the control of the sales reps and the store buyers, and to some extent, are the result of policies forged in the lofty offices of publishing executives. There are simply too many books for too little space or time, and the brutal laws of supply and demand will not be suspended simply because the product is intellectual or artistic. But as the practices I've discussed seem to be becoming institutionalized on a level uncomfortably close to where the ladies and gentlemen in Editorial live, we should start asking ourselves where we should draw the line between incentives and shmears.
Richard Curtis
This article was originally written for
Locus,
The Newspaper of the Science Fiction Field. It's reprinted in
This Business of Publishing: An Insider's View of Current Trends and Tactics Copyright © 1998 by Richard Curtis. All Rights Reserved.
Labels: bookselling, Publishing in the Twenty-first Century, Publishing Industry, Richard Curtis
Initial post: Jan 31, 2010 2:22 PM PST
