Monday, November 05, 2007

The Fall of a Publisher

As anyone involved in romance writing knows, there have been a number of small publishers, epublishers and otherwise, who have closed their doors lately. This has caused panic, upset, and general insanity of course. Not that I’m blaming anyone but the publishers. It’s upsetting when you spend months and years looking for a publisher and finally find one you think is reputable, because you have done your research, only to learn that they are completely irresponsible. It’s even more upsetting when you discover that your book might very well be held up in their bankruptcy hearings for quite some time.

Since I’m not part of authors' loops or groups I don’t often hear the scuttlebutt that goes on behind closed doors, but one kind reader alerted me to some of the panic and asked that I make some attempt to try to calm people and quell their nerves. This silly reader thinks people actually listen to me. While I’m flattered, I’m not sure I can do any good.

What I have been told is that some writers are urging those who have books or proposals with these houses to rush out and register a poor man’s copyright (by the way, there’s no need to do this in any instance ever, but I suppose it can’t hurt); they are being told to retitle the book or change the characters so they can sell it elsewhere. Folks. None of this is going to work. The first thing you need to do is, if you are under contract, officially terminate the agreement. Demand that rights be reverted in a letter sent by you, your lawyer, or your agent via certified mail. Then you need to wait. Yes, I’m afraid you’ll need to wait and see how things play out a little. No publisher is going to want to touch a book that might get them into legal entanglements, so changing a title or a few character names is risky business for you, for the publisher, and for your career. Do you really want to go down that road?

My best suggestion is to place your focus, at least for the moment, on your next book. Make that something that another publisher would really want and, in the meantime, work at getting those rights legally back from the defunct publisher.

As for whether or not you are owed money by these publishers, you need to talk to a lawyer about that. You need to follow your contract’s accounting clause and demand an accounting of the books. And you need to decide if the cost of said lawyer or CPA is going to be worth what you really might be owed for those books. In any bankruptcy situation people lose. Those that are likely to see some money are those that are owed the most. My guess is authors are not on the top of this list.

I wish I had better news for you. I truly feel horrible for all the authors caught up in this mess and wish all of them well. For now, though, keep looking forward.



Phoenix Sullivan said...

I'm disappointed the RWA hasn't done more for their member authors caught up in these events. I'm on the Pro loop (though not directly affected by the bankruptcies), and while the authors have speculated about what needs to happen, I have heard very little from the RWA attorneys. I think that, despite all its political issues, the SFWA wouldn't have ignored their membership the way the RWA has. A shame, considering author advocacy is one of the things author-centric organizations should be good at.

Deanna Kent-McDonald said...

Just thinking about this happening to a writer who has worked their you-know-what off to get their work published makes my stomach ache.

Sandra Cormier said...

Many of the reputable small presses are adding a clause in the contract that states if there is a bankruptcy or if the publisher ceases operations, the rights immediately return to the author. I'm sure there's still a bit of waltzing involved before the author is free of the contract, but it's a start.

Unknown said...

I'm not trying to advocate the small group I'm with, but I was really impressed that they paid attention to the, mess? And took steps to avert the same thing happening to them--it might have caused flack on the loops attached to this particular publisher, but ultimately--when you're with a group that doesn't have a lot of leeway, every decision affects the greater whole.

There are some small presses that you have good feelings about, and I think Wild Rose (yeah--it's new, but I think it's "strong" for a newcomer)will be one of the ones that survive the jump from small to mid. It's all about being pro-active and learning from others.

And...I know people caught up in this too. I hope it settles down soon.

Jenny said...

I have published a few books that discuss small business law issues, so I have seen lawyers discuss this issue.

It turns out that if a company goes bankrupt holding assets you haven't been paid for you can still be screwed.

For example, I have heard of people installing a computer at a customer's office. Then the customer goes bankrupt without paying for the computer, but the computer is treated as an asset of the customer and subject to bankruptcy claims. The seller may get pennies on the dollar if they are lucky.

That said, I've also been a small press publisher (17,000 books sold) and I learned first hand about what can happen when a chain changes its buying policies overnight.

It might not have been a question of the publisher being sleazy and hiding problems. It might have been a situation where 5,000 books that were "sold" to a chain like Borders were returned unexpectedly because the chain decided one day to reallocate shelf space to some other product they thought would sell through better.

When the books are returned, wholesalers demanded full repayment for the books. All publishers have reserves against returns, but when a chain decides to stop stocking a class of books the returns can be be 10 times higher than the historical return rates on which that reserve was set.

When I was running my press I got hit by a sudden Borders policy shift that resulted after Borders decided to stop shelving most small press books. Borders had shelved my books for 7 years and bought at a very steady rate with a very steady sell through. All of a sudden I had to refund the money I had received for several hundred $40 books all at once. It was terrifying! Every day the UPS truck brought me a pile of boxes of returns. I usually got one carton back a month.

I had the assets to cover it, fortunately, but I didn't have that many titles in print at one time. A publisher with 20-40 titles in print that got cut by a chain could end up in bankruptcy without warning, because they would get too many books back to be able cover the amount they would have to pay in returns to the wholesalers. At that point, the wholesalers would not stock their books, and they would be out of the publishing business, like it or not.

I don't know the situation with the particular small press you are discussing, but I have to say that small press publishing is right up there with buying commodities as being a very risky business where people who have "beginners luck" can end up overextending themselves and end up in very big trouble.

Nadia said...

RWA offered to bid on the Trisk contracts on the behalf of the authors, but they turned it down. Not RWA's fault that they didn't want it.

You can read more about it here.

Heather Moore said...

I was at the URWA conference in February this past year. A romance publisher was there and represented herself very poorly, I thought. From her dress to her mannerisms. She admitted that she wasn't a professional editor, but was a friend of the company's owner. She basically said they accepted anything for eBooks, and if it was good enough, it would get a paperback release. I wasn't surprised to see a notice a few months ago that the publisher had closed its doors.

Anonymous said...


RWA's offer was to have the authors themselves send money to the RWA who would then purchase the contracts on their behalf and revert the rights to the authors.

Not much help, if you ask me.

Anonymous said...

So the skills required to become an author are now:

* Writer
* Editor
* Ad Copywriter
* Marketer
* Publicist
* Politician

and we can now add to that list:

* Bankruptcy Attorney

Sweet! It just gets better all the time!

Unknown said...

This is very interesting and most timely for me. I just wrote Haworth Press yesterday asking for my rights back. Now, as you say, I wait. ::sigh::

Thank you.
storm grant

Angela James said...

All publishers have reserves against returns

Jenny, I don't think this is as common in small press publishing as it probably should be. I know of few small press/epublishers that do this, unfortunately.

Sandra Cormier said...

Jodi, Wild Rose Press is one of mine, as well as a Canadian small press. They're both being very careful not to be caught with crippling returns.

Jenny, your story is fascinating. I'm learning so much!

Aimlesswriter said...

Is this another reason we should always work through an agent?
Jessica; If this were one of your authors what would you do? Could you do anything? Would you see this coming?

Jenny said...


E-pubs should not have significant returns nor would so-called "small presses" that only publish in print using POD. But the minute you turn into a true print book publisher and do what you have to do to get a copy of your book into every Borders and B&N before a customer requests it, you DO run into the reserves issues.

My understanding is that the Tris debacle occurred after they ventured into printing runs using a book press, as opposed to single copy POD. And it looks like they may have done it with too many titles and didn't understand how it works.

The reason a small press interesting in getting shelved in stores would have to publishing via a book press instead of POD E-publishing is that the unit costs for POD are so high that it isn't possible to price books competitively and publish POD.

A 300 page book press trade paperback might cost $2.50 to print in a run of 2 or 3,000. (That number is a couple years old, so it might be a bit more now, but not more than $3) The same book printed POD could have unit costs of anything from $8 to $12 a copy.

Since you must pay 60% to Ingram or Baker & Taylor to get books shelved in stores without customer requests, you can see that the POD price makes success impossible. Your POD trade paperback would have to be priced at $20 just to cover the POD printing cost and then you have to pay your author, shipping, overhead, and profit etc, so the book ends up having to be priced at $27.

By the way, someone mentioned "offset printing." Printing a book via any offset house that isn't a book press also results in a very expensive book. My first quote for my first book was from a local offset house. They wanted $12 a copy. I got the same book printed by a book press in Michigan (where most book presses are, near the paper mills), for $3. It was a big book that used a lot of paper. Further print runs after the plates were made were around $2.

The smallest run you can do at a book press is 500 copies but it will cost almost the same amount to print 2,000 copies because the set up costs are high and you pay much more per copy for short runs.

Publishing is a miserable business! It was only when I started publishing rather than authoring that I started to understand why advances are so low and why most editors even at big houses are afraid to stick their necks out and do something really different that might fail.

Angela James said...


E-pubs should not have significant returns nor would so-called "small presses" that only publish in print using POD. But the minute you turn into a true print book publisher and do what you have to do to get a copy of your book into every Borders and B&N before a customer requests it, you DO run into the reserves issues.

With all do respect, but we (Samhain Publishing) use POD and we certainly have returns and unfortunately, there are times when they can be significant, when a book doesn't sell well on the shelves, and as such, we use a reserve against returns in our contracts.

It's now possible to do POD that isn't single copy POD. I believe that the most of the larger small presses and epublishers don't do single copy POD any longer. For one thing, as you said, single copy POD makes it nearly impossible to get your books into bookstores because it creates a non-returnable situation and most bookstores won't even consider shelving them for that reason. The fact that you see books from NCP, Loose Id, etc. shelved in stores like Borders and independent bookstores is the first indication that they're not using single copy POD but a
book buyer friendly version of POD. It makes one hate the term "POD" actually, because most people think of it (including booksellers) as single copy, non-returnable.

Additionally, working through Ingrams with POD, we certainly don't pay them 60%. As my publisher said, "that's crazy!" You're right, we would never make any money!

Perhaps things have changed since you ran your publishing house? and though I certainly can't speak for NCP, Loose Id and others, I can speak for Samhain, a small press/epublisher, and say that your post is no longer current/entirely correct as far as information about how POD and returns work for how we put our POD books in print and I believe that would be true for other publishers as well.

That said, there are still many, may small presses and epublishers who do do single copy POD and of course they would have no reason for reserve against returns. But the generalization you made about E-pubs should not have significant returns nor would so-called "small presses" that only publish in print using POD. no longer holds true for all epublishers/small presses and I think it's important that authors understand that, because in those cases, a reserve against returns can certainly help prevent publishers getting into financial trouble like Trisk did.

As a kind of addition and back up evidence to what I'm saying, I *heard* of a smaller epublisher recently who got into trouble trying to go print/POD, tried to charge the authors for the returns (not just a percentage but the full price of the book, yeek!), and because of this has been considering going back to "just" epublishing. Certainly I don't know all the details, but it sounds as if they 1) didn't fully understand how returns could work with POD (not single copy POD) and so 2) didn't have a reserve against those returns. Of course, I'm sure there are many other variables and info to this that haven't been shared but still, I can't say it enough, it's important for authors writing for/signing with small press and epublishers to know that there can and will be print returns and to know how those are going to be handled by your publisher.

Jenny said...


If your publisher is publishing via Lightning Source, which is Ingram's wholly owned POD subsidiary, they may not be paying the 60% discount, because I'm almost certain that the Ingram cut is already built into Lightning Source's pricing. In short, you're paying Ingram their cut when they print, not
after they order, as is the case when they order a box of already printed books from you.

But when I last checked, for any small press book that Ingram handles that comes into their warehouse in a box, rather than being printed by Lightning Source's machines, they did require that the publisher give them a 60% discount.

It was 55% for many years, but they changed that in 2005. It was one reason that when I sold out my last printing I didn't print any more.