Book biz: Read it and weep
This summer, the book biz is facing problems that are nearly indistinguishable from those confronting the film industry. And execs from the publishing world, like their Hollywood counterparts, are trying to come up with solutions to their ills and to create new formulas for success.
The major publishing houses are complaining that they are forced to pay obscene amounts of money to attract or keep proven stars --- though increases in book sales are not keeping up with the growing advances.
If a book doesn't perform well during its initial outing, it is often dead in the water.
The book majors are predominantly owned by conglomerates that view publishing as a contributor to the bottom line, not as a cultural business. As a result, the media, consumers and even industry mavens decry the glut of mediocre product flooding the market.
Indie publishers and bookstores say they are being shoved out of the marketplace by the majors.
These dilemmas come at a time when the publishing industry is undergoing some well-publicized tumult --- and when the studios are, more than ever, counting on publishers to provide them with source material, biz inspirations and promo opportunities.
And the book world is feeling the pressure. Profits are tumbling, sales in most book categories have been flat or are declining, and returns from book sellers have reached unprecedented levels.
"The question that rattles the sleep of many publishers is: How solid is the business of publishing?" Bantam spokesman Stuart Applebaum says, adding that "1997 is a tough business year for all of us: You have to run twice as hard to stay in place profitably; aggregate sales are not increasing in terms of operating and marketing costs; and there is an erosion of readers who buy the actual books."
"That said, we haven't erected a wailing wall. We're just trying to be smarter in the way we do every aspect of our business."
Despite tremendous growth in the number of books shipped and sold --- U.S. consumers spent $25 billion on books in 1995, the most recent year for which figures are available --- publishers are hurting.
"I'm scared because we have a country where people are less and less literate, and there is a never-ceasing flow of entertainment outlets competing with us for a similar demographic," Villard publisher David Rosenthal said.
One money-saving solution is to cut back on the number of titles released --- most publishers reportedly are reducing the number of titles they will print by 25%, as well as reducing initial print runs --- however, these moves won't decrease overhead, production and promotion costs.
And with fewer titles in the marketplace, it becomes even more urgent for each book to succeed during its initial release, so more would be spent on advances to ensure "event" books by name authors.
While the problems facing the book industry are universal, to paraphrase Tolstoy, each unhappy family in the pub biz is unhappy in its own way. HarperCollins, a division of News Corp., lost more than $7 million for the first quarter of 1997, and profits are down a staggering 80% for the first nine months.
To address these problems, HC has embarked on a series of moves to streamline the company. Among the changes HC took in March, were a wide-scale restructuring of the editorial and marketing departments in its adult trade group; HarperCollins San Francisco will cut the number of titles it publishes from about 200 per year to 80, and the West Coast outpost laid off 17 people from its sales side after those functions were transferred to New York.
For years, Hollywood has flirted with the publishing industry, finding source material and making deals for novelizations and movie tie-ins. In the past few years, that casual flirtation has become a full-blown affair.
With earnings at several big publishers remaining stagnant or decreasing last year, the two worlds are now trying to maximize their relationships. In many ways, they have no choice but to try to incorporate the oft-used "synergy" into their dealings, since most studios and book publishers are owned by conglomerates --- often the same conglomerates.
On another level, pic and publishing execs are closely watching each other, aware that they share many of the same techniques and are subject to the same pitfalls.
"There is a lot of 'Hollywood-ization' going on in this industry," Rosenthal says. "The same madness that seems to bring production budgets to $100 million is in this business as well. A $1 million advance for a book is the same thing as a publisher making a $60 million to $80 million film --- the risks are the same."
Putnam senior editor David Highfill said he has seen significant change in recent years in the increased role of film and foreign book scouts who are more involved in the pre-publication process.
"They've changed how word gets out about a book --- how hype gets going. They put a tag on a project, which some agents have learned to manipulate."
With hype beginning at earlier stages, editors and publishers have less time to polish their material before film producers or foreign publishers come calling.
Publishers also are grappling with problems in the celeb-book arena.
Rob Weisbach earned his own imprint at Morrow based on his success as a junior editor at Bantam in initiating such celeb books as Jerry Seinfeld's "Seinlanguage" and Ellen DeGeneres' "My Point ... and I Do Have One." He often has been singled out as propagating the huge advances celebs now expect for their books.
But to do so, like any other publisher, he has had to pay huge, seven-figure advances to the sitcom stars and other celebs.
"Nobody will pay this if you don't think it will make money," Weisbach said.
"You make your choices and invest more heavily in the books and writers you have who really can write," Weisbach says. "Someone like Paul Reiser becomes especially valuable in the book world, not only because he is a celebrity, but because he has developed a track record as a proven writer who has been writing for a long time."
Weisbach's first test under his eponymous imprint will be "Whoopi," for which he paid actress Whoopi Goldberg $6 million for her collection of thoughts and musings about the world today. This book, says one lit agent, will have to net approximately $2.5 million in hardback sales alone just to break even.
Aid from ancillaries
While publishers never view hardcover sales as their sole source of revenue from a book, with so much at stake, the other ancillary markets --- paperback sales, foreign rights, book clubs, serial rights, etc. --- become even more essential in order for the book to earn out its advance.
Ironically, the rise in advances was partially owing to the increased profitability of subsidiary rights. By coughing up huge amounts to reprint hardcover bestsellers, paperback deals could bring more to the publisher than the original hardcover sales. Moreover, publishers then could justify paying huge advances, noting that they could "make it up on the backend." Paperback and foreign rights' deals would subsequently amortize the hardcover advances.
Increased only 4%
However, as advances have increased steadily, sales have not. According to the Assn. of American Publishers, total book sales in 1996 increased only 4%, down from a 5.8% gain in 1995.
"This escalation of advances will be the industry's undoing," Rosenthal believes. "It's not like they've all succeeded, a number of these big-advance, high-profile books have bombed."
Among the books that did not perform up to the level of their advances was O.J. Simpson criminal trial attorney Johnnie Cochran's "Journey to Justice," for which Ballentine paid a reported $3.5 million, and sold only half of its 500,000 initial printing. Co-counsel Robert Shapiro received a seven-figure advance for his tome "The Search for Justice" (Warner), which had about 50% of its initial printing returned to publishers; Jay Leno's autobio "Leading With My Chin" garnered the funnyman a $4 million advance --- and a reported 1 million first printing --- but became what one bookseller said was a "bow-wow."
Other comedians also fared poorly, including Brett Butler's "Knee Deep in Paradise," which sold less than half of
In the film biz, creative financing is a way of life; however, aside from booming author advances, the publishing industry has seen only little change in the way books are acquired and paid for.
According to industry vets, while lit agents such as ICM and William Morris still commission at 10%, many of the others have over the past few years increased their rates to 15%.
On the publisher side, 15% remains the ceiling on the U.S. royalty paid per copy, but there always are rumors of that ceiling being cracked. Many publishers have successfully held fast to this 15% rule. Applebaum says, "Bantam Doubleday Dell can be as creative and resourceful as anyone in rewarding our authors, but we don't crack the 15% royalty."
He said BDD has been known to walk away from a marquee deal because of this. Insiders say there has been speculation that "stars" the likes of Oprah Winfrey and Stephen King have struck pub deals giving them participation as co-publishing, profit-sharing players who potentially earn more than the industry's 15% royalty ceiling.
According to a book industry research study, approximately 1.5 billion books were purchased in 1995. Of those, 1 billion were adult titles, and the rest were juvenile tomes.
But many book industry vets say the picture is not as bleak as many would like to paint it.
No one can discount Winfrey's ability to promote the sales of books by featuring them on her TV show. Each of the six novels Winfrey has picked for her on-air book club --- "The Rapture of Canaan," "The Deep End of the Ocean," "Song of Solomon," "The Book of Ruth," "She's Come Undone" and "Stones From the River" --- have shot onto the bestseller lists, selling upward of 600,000 to 700,000 in paperback after being chosen.
"During this time in the industry, for a publisher to have one of its books chosen by Oprah is the equivalent of having the winning lottery ticket," says Bantam's Applebaum, whose house now holds that ticket.
Winfrey recently announced that the seventh book selected is Maya Angelou's memoir "The Heart of a Woman," which originally was published in paperback by Bantam in 1982.
And the Internet, once regarded as the death knell of the printed page, has emerged as one of its saving graces. With the advent of online bookstores like Amazon.com and Barnes & Noble Online, publishers have found another way to get books into the hands of readers.
'Choose your battles'
"You have to choose your battles. There are promotional things like the Internet, which is a totally effective means of publicity," says John Weber, publisher for indie house Marlowe & Co. "We've used it with a lot of our books. We have used it to put out chapters to our books that people can read, and to put out news that the book is available."
