Cabbages and Kings

A diary by the authors of the Louis Kincaid series

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Location: Fort Lauderdale/Elk Rapids, Florida and Michigan, United States

We are the New York Times bestselling authors of the Louis Kincaid series and other stand alone thrillers. We have taught writing at major conferences for ten years.

Saturday, July 28, 2007

The trouble with Harry

The Harry Potter Effect is old news in our business by now. Every time a new Rowlings rock goes Ker-PLUNK in the water, we all eventually feel the ripples.

Publishers dance around trying to position their books to survive. Booksellers won't talk to publicists when Harry's coming to call. And us mere authors? We don't even think about scheduling a signing when Dirty Harry's packing heat in town. Except for my friend Elaine Viets who likes staring down the kid. (Click on her name to read how she begs him to make her day.)

Personally, I haven't given Harry much thought. Until this year. I got switched to a summer publishing schedule and woodenchaknowit, along comes another Harry. The final chapter in the saga, no less. On tour, everywhere I went I had to sit near a mamoth poster of the little bastard with a big countdown sign.

TEN DAYS TO HARRY! SEVEN DAYS TO HARRY! TWO DAYS TO HARRY!

Then, a couple days ago, the early numbers came in for my new book. Strong enough to break USA Today bestseller list and make my publisher happy. But not enough for the Times list. They said: Well, all numbers were down this month because of --

Ca sera. No big deal. And hey, kids are reading books. Folks are making money. Sales beget sales. A rising ocean lifts us all. It's a good thing, right?

Then I read Joe Nocera's Talking Business column in today's New York Times. In it, he makes a convincing case for the other side -- the Dark Side, if you will -- saying that "Deathly Hallows" is a microcosm for all that is wrong with the book business today. You probably can't get into the Times' archive dungeon, so I will try to summarize it here:

Before the coming of the big stores like Barnes & Noble, there was no such thing as discounting. If the cover said a book was $25, that's usually what stores sold it for. But once B&N started it, everyone joined in -- Borders, Costco, Wal-Mart and of course Amazon. The bigger the bestseller, the larger the discount.

Harry Potter’s American publisher Scholastic had a suggested retail price on "Hallows" of $34.99. But the Barnes & Noble price was $20.99, a 40 percent discount. Barnes & Noble “members” got an additional 10 percent off.

At Borders, the price was also $20.99. At Costco, it went down to $18.19. And at good old Wal-Mart, Harry could be had for $17.87. (If you were willling to jump over to the UK, you could get a copy through a Wal-Mart subsidiary for the equivalent of $10.)

And Amazon? If you pre-ordered, the book was $17.99, a saving of 49 percent (including a $5 gift certificate and free shipping). Nacero figures Amazon is losing $10 per book and quotes an Amazon spokesman as admitting it is being sold at “slightly below break even.”

So why is everyone willing to lose money on the biggest book of the year?

Part of the problem, as Nocero points out, is that books aren't sold by just bookstores anymore. More than 50 percent of all books are now sold by non-bookstores. And stores like Wal-Mart, Costco and Target all try to undercut each other because they see books not as an end unto themselves but just another item to be dropped in the shopping cart. They're willing to let the new Harry go cheap because those jumbo bags of Cheetos and bales of Pampers help offset it.

“It’s not that different from a hamburger joint giving away the second hamburger free,” says Tony Schulte, a former executive vice president with Random House and Knopf.

But Nocero isn't buying it:

It is different. You just don’t see other industries losing money on their hottest brand to get people to buy less desirable merchandise. But that’s what the book industry does.

Why the hell is Barnes & Noble playing this losing game? It has no choice, Nocero says, because every book Costco sells is a book sale Barnes & Noble has missed. And although Amazons sales are still a fraction of the total, every buyer who clicks on Amazon is one less body in a brick-and-mortar store. Nocero quotes Sara Nelson, editor of Publishers Weekly: “It’s almost biblical. What Barnes & Noble did [to the independent bookstores]is now being done to them.”

As if we didn't need to be told, this is all just more evidence that the book business is just plain wacked-out. In 1980, there were about 42,400 new titles, according to R.R. Bowker Company, which monitors new books. By 2005, the number of new titles had jumped to 168,000.

This is also a good thing, right?

Listen to Nocero:

It’s a funny business, the book business, and making little or no money on a brand as powerful as Harry Potter is only part of it. Name another industry, for instance, where the manufacturer agrees to take back — and reimburse the retailer! — for unsold merchandise. Yet that is how the book industry has operated since the Depression. What other business can you think of where sales are essentially flat, yet the manufacturers keep ramping up volume?" Nocera asks. [Yet] each of these practices has a certain screwball logic. Because most books are written by unknowns, book publishers suspect that the returns policy makes stores more willing to take a chance on a new author.

Sounds familiar? How often in our little crime writing community have we heard that it is easier to break out a debut author than to keep a solid midlister going? Independent stores are shuttering their doors. Shelf space is getting harder to get. The lists are increasingly dominated by a handful of mega-authors like Patterson, Roberts, Evanovich. And every time one of them puts out a new book, a little bit more of the bookstore real estate is set aside for their lucrative backlists, leaving less turf for everyone else.

So why do publishers keep churning out so many books? Again, Nocero:

The reason for the rise in the number of published books is that the big publishers are owned by conglomerates that demand increased revenue and profits from their book divisions. Because publishers have no idea which books will succeed commercially (Harry Potter is an exception) they react by publishing ever more books, hoping to increase their odds of hitting the jackpot with a “Tipping Point” or “Da Vinci Code.” The vast majority of books, by the way, are commercial flops.

Depending on how you look at it, even Harry.

4 Comments:

Blogger Sandra Ruttan said...

Hey, congratulations on making the USA Today list!

I can understand, from a certain point of view, how every sale Costco makes is a lost sale... But there are some people who are still going to support the bookstores because they want to buy more books, have a discount card, etc. Yes, I pay more to buy at Chapters a lot of the time. My rationale is simple: it's the long-term savings. I know people who cut every coupon and drive store to store to store, saving their 10 cents here and 75 cents there. And what they save they spend on gas traveling around. Not to mention all that time.

Shopping for me isn't a sport. I go to Costco when I need to, nothing more. The only place I routinely go with nothing to purchase in mind is the bookstore. And we almost always end up buying something anyway. I get an automatic discount because of my membership, and then I get bulk discounts at certain times of the year after spending so much money. I'd rather get 10-20% off all my books than 50% off one title and pay regular price for the rest.

And how did stores here counter the possibilities of Costco/Wal-Mart sales? Midnight book launch costume parties. The photo on the right features my niece and nephew in costume for the party at the Chapters Dalhousie Station store. And you seriously think any kids who made costumes and stayed up late at night and went to the store didn't leave with a copy of Harry Potter, even if it was $5 more than at Wal-Mart? (I honestly don't know what the price differences were.)

Okay, I'm getting off my soap box...

7:19 PM  
Blogger Mark Terry said...

Amazon founder & CEO Steve Bezo has argued that for every new customer they got buying a discounted Deathly Hallows, they acquired a new e-mail address that goes into their marketing database, which to his mind, makes it worthwhile.

I've found just about everything about the Deathly Hallows from an economic POV to be troubling. One, I thought the originally stated price of $34.95 to be unusually high, even for a book that's aobut 750 pages long. (Do you suppose they stated that price so high because they knew they would be discounting it so steeply and they still wanted to make a profit on it?)

Two, the chains getting into a discounting war. Whoo-hoo, we cheer briefly, thinking that it's the consumers that win. Except... are there actually any consumers out there who, if the book HADN'T been discounted by ANYBODY would have NOT bought the book? Were there really going to be that many people out there saying, "Oh, man, $34.95, that's too steep, I'm going to wait a year for the paperback to come out."

I seriously doubt it.

So it strikes me that althought hey might have been fighting each other for the privilege of losing money on this book, the We-Gotta-Get-Harry-ASAP crowd (in which I was one) fell into two camps:

1. Line up at the bookstores at midnight to buy it so you can have it read by breakfast. (Sorry. Not me. I might be impatient, but this middle-aged guy values his sleep, even though I had to go pick up my 13-year-old at 1:00AM that Saturday morning from the public library from his Harry Potter Party).

2. Order it online ahead of time so it gets delivered to your mailbox the day of, which is soon enough. (That was my family's approach).

Otherwise you can pick it up at KMart or anyplace else, there's still stacks.

I wonder--really wonder--if the folks at the chain stores, etc., weren't just acting on fear instead of thinking it through.

3:43 PM  
Blogger PJ Parrish said...

Mark,
I agree with all you have said and wondered much the same thing, especially if publishers, when deciding a retail price of a book, aren't factoring in the discounting and thus inflating the cost. Everyone in the industry agrees discounting sucks, but no one can afford to buck what has become the norm. What would happen, I wonder, if books were all sold at the same price -- as stated on the book? Indies could certainly compete more fairly. And the big chains might have to find new ways to entice customers...like with better service?

Well, it ain't never gonna happen.

I had dinner with friends the other night who were raving about the new Harry -- and the fact they had found it at Wal-Mart so cheap. I asked them if they would have bought it at $34.99 and they said yes, it that were the going price.
When I explained to them the effect of discounting, they were dumbfounded.

3:53 PM  
Anonymous Jodi Turchin said...

I'm a teacher and money's an issue . . . I would have checked Harry out of the library if I hadn't gotten him for under $20 at Wal-Mart.

But I do buy my P.J. Parrish books at BN or Borders. :)

7:22 PM  

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