Friday, December 11, 2009

Pulping is the Publishing Industry's Dirty Little Secret

   
   

In time for the holiday season, while you're perusing best-of-lists to find that perfect book gift for a loved one, here's something the publishing industry doesn't want you to know. By shipping books to retailers on consignment terms, then requiring the return or destruction of unsold merchandise, the publishing industry operates unlike all other manufacturers. An estimated 30 TO 40 PERCENT of books are returned by bookstores annually. Between 65 and 95 percent of returned books are pulped - destroyed by publishers.



Clearly, the publishing indutry overprints on a massive scale because of returns. And the environmental impact of this pulping waste is staggering. The Canadian website Book Industry Bailout has calculated the shocking scale of trees cut and greenhouse gas emissions due to overprinting by the publishing industry in Canada. In the U.S., the environmental destruction is multiplied at least tenfold, since our publishing industry is 15 to 20 times larger.



Most big publishers would like to keep this a secret, refusing to release hard figures on their returns. Conscientious small publishers are thankfully not so quiet on the subject, especially those who have moved to publish-on-demand business models.

Reporting in the Wall Street Journal in 2005, Jeffrey Trachtenberg called returns "the dark side of the book world," and quoted Barnes & Noble CEO Steve Riggio as saying, "We'd like to see (returns) discontinued. Any rational business person looking at this practice would think the industry has gone mad." Last year, Borders executive VP Robert P. Gruen told the New York Times that "We generally support the idea of looking at potential solutions to a return system that is not working well for the industry as a whole."



According to Book Industry Bailout, the practice of publishers providing books to retailers on returnable terms only dates to the 1930s, and "began as a temporary sales gimmick by a desperate New York publisher." But the concept spread as booksellers demanded the same favorable terms from other publishers, and eventually became standard – "handicapping an entire industry for the next seven decades in an unfortunate practice that has wasted literally billions of dollars worldwide."

Nearly all non-book retailers purchase products from manufacturers or distributors at 50% or less of their retail value, mark them up, then discount the items until they sell. They can't return unsold items.



The business of selling books turns this normal practice on its head by allowing book returns of unsold books to publishers. Yet it costs money to ship returned books back. Thus was born the practice of stripping covers from books, only sending back the covers, and book stores themselves destroying the remainder of the unsold books.


Dumpstered books behind a B. Dalton Bookseller store in Ohio, 2003

Independent book stores have far fewer returns than chains, with sell-through rates estimated at 80 percent. This suggests that smarter buying practices by stores reduce returns, and further demonstrates why overprinting is so unnecessary.

Many chain book stores do the publishers' dirty work of pulping the books for them – booksellers call it dumpstering. And when financially struggling book chains shut stores, as is happening right now with Borders closing 200 Waldenbooks locations, there is enormous pressure for management to take the cheapest way out and order employees to simply dumpster unsold books.

4 comments:

Andy Laties said...

Great article.

The cited Jeff Trachtenberg article was informed by his conversations with me--I recount this tale in a chapter of my forthcoming book http://rebelbookseller.livejournal.com/29137.html

Andy Laties, Author,
Rebel Bookseller: How To Improvise Your Own Indie Store And Beat Back The Chains

Andy Laties said...

Also, I started writing a comic novel in which the stripping of books will play a significant role....Here's the first chapter.

http://rebelbookseller.livejournal.com/19248.html

Andy Laties
www.rebelbookseller.com

Erik said...

Andy, thanks for commenting.

The chapter of your book where you discuss some of the background behind Jeffrey Trachtenberg's 2005 WSJ article ("An Industry Gone Mad") is very interesting, and provides further insight into the mindsets of executives who control the big book chains.

Andy Laties said...

My first book, "Rebel Bookseller" takes as one of its principal themes the idea that the returnability of books must be abolished. You can read the entire book for free, on Books.google.com

http://books.google.com/books?id=HBuq-kHI2ZUC&printsec=frontcover&source=gbs_v2_summary_r&cad=0#v=onepage&q=&f=false

The very idea that a thousand bookstore employees are rising up against their boss! Hooray! This could be the beginning of something transformative.

I have bought books on a non-returnable basis since 1996 -- and my stores have been far more profitable than the industry average.

The fact that end-buyers are the ones who pay high prices to subsidize book-returnability should help clarify that this practice is injurious to the entire society because it forces prices up and therefore forces book-buying down. Lower prices would increase book-buying!

So -- it's very bad sales practice for the big players to adhere to this particular system.

HOWEVER -- they are addicted. The book returns system is the locus for an elaborate credit-support scheme whereby the publishers are the real owners of all the books in the chainstores.

Bookstore companies roll their debt over buy over-buying and over-returning, applying today's return-book-credit against last month's overdue bill.

Thus, the billion dollars of books on B&N's shelves that they don't own are effectively on loan to them INTEREST-FREE from the publishers.

If book returnability were eliminated, Barnes & Noble would have to suddenly actually pay up for (or, rather, invest in) the inventory in their stores. That's over one BILLION dollars they would have to pony up to publishers!

Barnes & Noble will not be able to find a billion dollars from anywhere in the financial marketplace right now (they're only a seven-billion-per-year company so cannot simply borrow a billion dollars).

Therefore, book returnability will be abolished only with the destruction of Barnes & Noble. THAT IS OUR GOAL. (Amazon is helping us. Many indie-bookstore activists have trouble grasping the weird fact that the enemy of our enemy is our friend...at least for now.)

(I do not claim to speak for all indie bookstore activists!)

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