Book Business

While the past months have seen a sharpening of the economic hit taken by the retail sector, the recent weeks' news has been no less than startling in the publishing world. According to a November 24 report in the industry paper, Publishers’ Weekly, “Josef Blumenfeld, v-p of communications for HMH [Houghton Mifflin Harcourt], confirmed that the publisher has ‘temporarily stopped acquiring manuscripts’ across its trade and reference divisions.” He added that this is “not a permanent change,” though when new manuscripts would be considered was not stated. It is not clear as to whether manuscripts already approved and set for release would make it to bookshelves.

Blumenfeld also noted that any future manuscripts would be rigorously assessed for “market interest”. It is of note that “artistic merit” is not the primary criteria.

Houghton’s announcement comes on the heels of a leaked internal memo from the previous week wherein Random House, which is owned by the international media conglomerate Bertelsmann, proclaimed that it would freeze all pensions at their current level and would not offer pensions to people hired after January 1, 2009. There have since been reports of a major restructuring of the publishing housed under Random’s umbrella, with the number being reduced from five to three. This, despite the claims of the Bertelsmann website on November 11 that, “After nine months of the 2008 financial year, Bertelsmann reported a solid business development. The international media company achieved revenues almost at the level of the previous year in its continuing operations.”

Since these revelations, the news from the industry has grown increasingly worrisome; San Francisco-based Chronicle Books announced that it will be cutting back almost 5% of its staff due to the outlook for 2009. Macmillan has announced a pay freeze for staff earning $50,000 and over, and the establishment of a pool to provide for modest increases for those earning less. Penguin has likewise frozen pay for those earning $50,000 or more.

Over the last two decades, many publishing houses have been absorbed by non-publishing entities, and the emphasis has been on making fast profit for the shareholders, rather than on building a solid literary or cultural institution. In the last few years even the largest of houses have been taken over, merged with, or outright bought by enormous entities whose bottom line is not cultural enrichment. These new organizations show a lack of willingness to take chances on new literature, and a quick abandonment on any projects that do not garner immediate attention. As we are seeing with HMH, in tough economic times even the supposed raison d’etre of a publisher – to find and publish new material – is sacrificed to cut costs.

Concurrently, the retail aspects of the book business underwent several major changes – from the rise of the “big box” bookstores and the resulting explosion of retail shelf space at a time when readership had been declining, to the advent of the internet as a shopping venue. Both had an adverse effect on the more traditional independent and family-owned bookstores, with many going under, partly due to the publishers’ refusal of deep discounts which the larger chains were offered. A series of lawsuits by the American Booksellers’ Association in the 1990’s obtained cease and desist orders against such un-equal business practices.

The current economic situation is also felt by the large chains. Borders has been teetering on the brink of bankruptcy for months and its third quarter reports show overall sales down 10%. Should the company fail, the return of product would be more than most publishers could fiscally bear, and approximately 30,000 workers would be rendered unemployed. The ripple effect would also very likely take down distributing companies, who would be forced to reduce staff as well. What once might have been the dream of many independent booksellers would actually spell the doom of massive segments of the industry.

While certain independent stores are able to scrape by on the strength of the demand for used books, the resource is not infinite; it does take the publishing of new books to eventually supply that market. Were the publishers to fail, even the stores which exclusively sell used books would see their stock dwindle. In recent years, the number of failed independent book stores has increased, succumbing to the economic pressures of meeting increased rents and decreased sales.

The book business has not until recently been viewed as a means to get rich. Very often writers and sellers of the books have scraped by, their love for words and ideas taking precedence over profit. The same can be said of many publishers and presses, some of which have maintained that integrity and a number of which are still producing vibrant, unusual, and original works. Rather than banking on the Next Big Thing, or, as is more common now, The Next Blockbuster Sequel, they have built their reputations on presenting well-written, enduring works with an eye to artistic advancement. It is quite possible that they will triumph in the end - but it's going to be rocky for a while.