The Writing Game: Part Two, Returns
Monday, February 15th, 2010 10:17 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
rolanniIn the interests of keeping all of this in one place, follows a guest column by Steve Miller/![[livejournal.com profile]](https://www.dreamwidth.org/img/external/lj-userinfo.gif)
kinzel, in answer to a point raised by Dave Freer in the discussion of Part One.
Dave Freer alluded to one of several issues that make the entire publishing process more complex -- and hence more fraught -- than the basic description given above. Explaining why this situation (still) exists would take a capable economic historian and somerope extreme patience; so we'll try to describe this threat to common sense known as "reserve against returns."
Please understand that the following is distilled from years of talking with bookstore owners, people in the distribution system, publishers, agents, other writers,
but may not exactly represent the system as it exists today, but only as we've heard it described here at the Cat Farm and Confusion Factory -- yes, YMMV -- your mileage may vary.
The publishing industry is not a normal retail delivery system, as much as some would like to hide this fact. The current retail book distribution system, born in the aftermath of the Great Depression and formalized during and after WW II, is predicated on filling bookstore pockets and shelves with merchandise. Books and magazines, to be precise.
Now, what distributors do is take stock from publishers, put it in warehouses, and then send it to needy bookstores. The bookstores then put books on shelves, while the process of paying the publisher begins -- which is to say, the 30/60/90/120 day delay starts. Eventually bookstores pay the distributors and the distributors pay the publishers, after which point the publisher knows how many books have been sold and so can pay the author royalties. This means that royalties follow the sale by quite a distance, timewise. But! That's not all!
You see, the publisher knows 1) not all the books sent to the distributor will sell, and 2) books that have been in the store a certain amount of time (more on this time later)
may be returned for credit. Right -- neither the bookstore nor the distributors are necessarily buying the books for good, instead in many cases there is an on-going crazy
dance of books, cash, and credit in which no one can quite be sure what's where, and wherein unsold books act as a currency. The publisher thus uses a contracted "reserve against returns" as a way to protect themselves against sending the author too much additional cash too soon -- or at all.
The reserve percentage in some cases is clearly spelled out in the contract, and at other times is simply noted as "reasonable reserves against returns." As understood here, this means a publisher could ship 15,000 books to distributors and sell 10,000 of them, but -- given a creaky and delay-ridden system -- could potentially "reserve"payment on a significant number of them (say 50%) until some reporting period in the future. So a book sold, let us say on July 1 of year xx00 could be reported in the April report of year xx01 but not paid to the author until the April report of year 02 when that reserve expires. Given that 50% reserve, then, on an $8 book we can see: $8 X 8%= .$64 x 5000 = $3200 delayed by almost 2 years.
Understand there's a tiered system in returns, with hardback books (and most trade paper books as well) fully returnable -- that means the physical book gets repacked and shipped back to the distributor -- and sometimes all the way back to the publisher. Mass market books don't have this luxury -- they are "returned" symbolically by destroying them, and returning just a cover.
Now, we mention the currency of books, and that's because the distributor has no investment in which books get sold: they just want to be paid. And with a returns system that counts book covers stripped off of books the same as returned books, means that those returns can be used to offset sales made by a publisher to keep cash in-house -- at the distributor. Also, a bookstore might use such a system in order to maximize cash for holiday season buying of high profit plushies and seasonal specials, or to balance a bill owed to a distributor.
Of such accountancy are things like "virgin stripping" born. Virgin stripping is, alas, not nearly as much fun as it may sound. We know bookstore folk who have been reduced to tears (as well as authors!) by this act. In virgin stripping a truck appears at a bookstore and boxes -- cases of books -- are disgorged. Then, the designated bookstorian does an inventory to determine that the right number of boxes are there, and proceeds to open the cases -- perhaps dumping them on the loading dock outside, or in the properly concealed back room cement floor, and tears the covers off the books before they ever see light of shelf. The covers are then shipped back up the so-called supply chain. Imagine the joy of the poor author who works part-time in a bookstore to make ends meet who is faced with virgin stripping their own first novel so that the bookstore owner can get in a full load of Easter candy.
Oh right. One of the bullet points on the Lee and Miller joint resume is: owned a bookstore featuring genre fiction.
kinzel, in answer to a point raised by Dave Freer in the discussion of Part One.Dave Freer alluded to one of several issues that make the entire publishing process more complex -- and hence more fraught -- than the basic description given above. Explaining why this situation (still) exists would take a capable economic historian and some
Please understand that the following is distilled from years of talking with bookstore owners, people in the distribution system, publishers, agents, other writers,
but may not exactly represent the system as it exists today, but only as we've heard it described here at the Cat Farm and Confusion Factory -- yes, YMMV -- your mileage may vary.
The publishing industry is not a normal retail delivery system, as much as some would like to hide this fact. The current retail book distribution system, born in the aftermath of the Great Depression and formalized during and after WW II, is predicated on filling bookstore pockets and shelves with merchandise. Books and magazines, to be precise.
Now, what distributors do is take stock from publishers, put it in warehouses, and then send it to needy bookstores. The bookstores then put books on shelves, while the process of paying the publisher begins -- which is to say, the 30/60/90/120 day delay starts. Eventually bookstores pay the distributors and the distributors pay the publishers, after which point the publisher knows how many books have been sold and so can pay the author royalties. This means that royalties follow the sale by quite a distance, timewise. But! That's not all!
You see, the publisher knows 1) not all the books sent to the distributor will sell, and 2) books that have been in the store a certain amount of time (more on this time later)
may be returned for credit. Right -- neither the bookstore nor the distributors are necessarily buying the books for good, instead in many cases there is an on-going crazy
dance of books, cash, and credit in which no one can quite be sure what's where, and wherein unsold books act as a currency. The publisher thus uses a contracted "reserve against returns" as a way to protect themselves against sending the author too much additional cash too soon -- or at all.
The reserve percentage in some cases is clearly spelled out in the contract, and at other times is simply noted as "reasonable reserves against returns." As understood here, this means a publisher could ship 15,000 books to distributors and sell 10,000 of them, but -- given a creaky and delay-ridden system -- could potentially "reserve"payment on a significant number of them (say 50%) until some reporting period in the future. So a book sold, let us say on July 1 of year xx00 could be reported in the April report of year xx01 but not paid to the author until the April report of year 02 when that reserve expires. Given that 50% reserve, then, on an $8 book we can see: $8 X 8%= .$64 x 5000 = $3200 delayed by almost 2 years.
Understand there's a tiered system in returns, with hardback books (and most trade paper books as well) fully returnable -- that means the physical book gets repacked and shipped back to the distributor -- and sometimes all the way back to the publisher. Mass market books don't have this luxury -- they are "returned" symbolically by destroying them, and returning just a cover.
Now, we mention the currency of books, and that's because the distributor has no investment in which books get sold: they just want to be paid. And with a returns system that counts book covers stripped off of books the same as returned books, means that those returns can be used to offset sales made by a publisher to keep cash in-house -- at the distributor. Also, a bookstore might use such a system in order to maximize cash for holiday season buying of high profit plushies and seasonal specials, or to balance a bill owed to a distributor.
Of such accountancy are things like "virgin stripping" born. Virgin stripping is, alas, not nearly as much fun as it may sound. We know bookstore folk who have been reduced to tears (as well as authors!) by this act. In virgin stripping a truck appears at a bookstore and boxes -- cases of books -- are disgorged. Then, the designated bookstorian does an inventory to determine that the right number of boxes are there, and proceeds to open the cases -- perhaps dumping them on the loading dock outside, or in the properly concealed back room cement floor, and tears the covers off the books before they ever see light of shelf. The covers are then shipped back up the so-called supply chain. Imagine the joy of the poor author who works part-time in a bookstore to make ends meet who is faced with virgin stripping their own first novel so that the bookstore owner can get in a full load of Easter candy.
Oh right. One of the bullet points on the Lee and Miller joint resume is: owned a bookstore featuring genre fiction.
