Examining a Dinosaur Trapped in the Tar Pits

It’s no secret that media outlets of all stripes are mulling over new distribution strategies. CNN recently began putting video of its news segments online for free; meanwhile, the New York Times and Los Angeles Times are heading opposite directions in terms of whether to charge for Internet content.

Today, the Wall Street Journal brings us (subscription required) a fascinating look at the distribution model of another industry: books.

Turns out, it’s a textbook study of a fatally flawed system.

Noting that millions of unsold copies of books are returned to publishers every year, the Journal’s Jeffrey Trachtenberg writes, “Returns are the dark side of the book world, marking not only failed expectations, but the crippling inefficiencies of an antiquated business. It’s a problem that’s only getting worse. The industry’s current economic model pushes publishers to generate a small number of blockbuster hits. But picking winners is a quixotic enterprise, and as publishers ship an ever-increasing number of books to stores, hoping to hit the jackpot every time, stores are sending an ever-increasing number back.”

Trachtenberg points out that in most retail industries, sales outlets don’t get to return unsold product to manufacturers. “The book industry, by contrast, has been saddled with this system since the Depression, when publishers told struggling bookstores they could return unwanted books as long as they kept ordering new titles,” he explains. In 2003, 34 percent of all the adult hardcovers printed were sent back unsold; worse, “the increasing rate of returns has helped ignite a destructive cycle. So many books come back that publishers say they have raised prices to compensate for the anticipated lost revenue. That in turn makes many books harder to sell, creating more returns.”

As Trachtenberg notes, it’s a system that’s frustrating for all involved. Authors don’t get royalties on those unsold copies; agents don’t get commissions; bookstores lose out because they aren’t allowed to discount books that aren’t selling; and publishers get stuck with treeware that no one wants — to say nothing of the forests martyred to the vanity and inefficiency of the process.

It’s a classic example of an antiquated system that’s stuck in place simply because it’s stuck in place. So is there a way out? Trachtenberg’s sources don’t seem to see one. Thomas Burke, head of a small publishing imprint, says he is no longer accepting returns from retailers, but that as far as the larger industry is concerned, his novel stance “won’t create a ripple.”

So, for the moment, weep for the trees that are cut down to print entire warehouses of books that no one wants to read — and for an industry full of smart people, none of whom apparently has any clue as to how to extract themselves from this trap.

Bryan Keefer

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Bryan Keefer was CJR Daily’s deputy managing editor.