*Reduce payrolls. In recent weeks, Pearson, McGraw Hill, and others have announced staff reductions
*Cut the number of new titles being published. Not a bad idea, since in 2007 we published over 280,000 new titles, and it is estimated that there were 100,000 self-published books released into the market this year
*Maintain retail prices or reduce them where possible in order to make them more attractive to the reader
*Reduce advertising and promotion expenses since there are fewer books being published
*Concentrate on and promote back lists
This playbook is sound, and it will work to some extent. But what is missing is a program that takes advantage of the opportunities that are available in a recession. There are, in fact, some measures that can be done best when the publisher, bookseller and printer are all hurting. These are inevitably issues that are too hot to handle during the good times, but now suddenly become doable. For example:
Returns: The difference between profit and loss for the author, publisher and bookseller is often the outrageous level of returns. While varying by product line, these can range from 25% to 60%. It is estimated that in order to achieve the $15 billion in net trade sales in 2007, there were in excess of $5 billion in returns. The author sees his royalty statement diminished by returns; the publisher sends millions of books to be pulped; and the bookseller incurs the labor and rental space to stock and then take books off the floor, then packing and shipping them to the publisher. All players are punished -- even the consumer who pays a higher retail price because of the inefficiencies in the system. During my tenure as Chairman of New American Library in the 1970s we instituted a “Bonus For Efficiency” program that enabled a retailer to achieve a higher discount if he kept his returns down. After a very painful beginning, the sturdy warriors of NAL persisted and consequently enjoyed years of increased profitability. The program was eventually dropped because not one other publisher in the industry followed suit. The recession provides the publishers and booksellers a unique opportunity to come together for their mutual interest.
*Production scheduling; The back list is the most important asset in the publishing business. Most publishers count on these sales for 50% to 60% of their revenue and a considerable portion of their profit. Printers are now suffering because of the decrease in new title production. The publishers can help their printers by placing orders for the back list on an annual or semi-annual basis, allowing the supplier to print at his option so that he can keep his plant operating at a more economic level. In exchange, the printer is able to bill on the normal delivery date and could possibly share some of the savings with the publisher.
*Technology: The delivery of information has been changing, and it will continue to change. This recession will end, and the publisher should be ready to participate in the new markets. It is prudent to use this period to be ready for the post-recession market by taking advantage of the current “down-time” to develop and implement new technologies.
Are these all the ways to take advantage of a recession? Not really. There are, no doubt, scores of other ways to take advantage of the current business climate. Publishers, printers, booksellers, librarians and just everyday folks in the business are very bright. Put to the test, they can create an entire new Playbook that will put all of us in the publishing industry on the offensive side of the line and get us through the hard times.
Publishing '09 "The Recession"
If you are dumb like me, you will need to know that the full screen button for the presentation is on the top right.
Martin P. Levin