A statement from Ingrams

As John Ingram issues a statement on the Lightning Source website regarding the advantages of print on demand, the lines increasingly become blurred between this printing method as a means of self publishing, and what most would call traditional publishing (i.e.,when the author does not have to meet the cost of publication him or herself).

I find myself agreeing with many of the points that John raises with regard to print on demand, and this will come as no surprise to regular readers of this blog. POD has many advantages to offer author and publishers alike, the ease of making changes to either the cover and/or text, the speed with which the books can be printed, bound and shipped, and most importantly of all, the ability to print books in small numbers without keeping a huge inventory. It seems that the rest of the industry is beginning to realise what authors such as myself have known for some time.

As John so rightly says, the industry needs something to transform it, not revive it. It will be interesting to see what The Money Programme has to say later in the week, when it presents its own analysis of the industry.

An article in the Irish Independent on Sunday poses the question, "Will we see radical new approaches to book publishing and selling over the next few years, some new faces and ideas that reflect our new-found search for meaning in these turbulent times?" I think to the answer to this, has to be yes, if the industry is to thrive and survive, and print on demand undoubtedly has a role to play.

Questions, questions and no answers

With the almost certain demise of Woolworths and wholesale arm EUK in administration, it is difficult to see where this credit crunch will end. Although not personally affected (despite claims by some quarters, my own job is relatively safe), it is distressing to see so many who are.

The situation at EUK does not look good. 700 staff lost their jobs last night, 2 weeks before Christmas, and the administrators are said to be calling in the company's debts. This is not good for the supermarkets either, who owe most of the money, although one cannot help but think that their sitting on this money for so long (figures of up £25 million are being talked about for both Salisbury's and Tesco), then EUK may not have been in this mess.

That though is the name of the game - as George Bush would have put it - the haves and the have mores. It has always been the way that some have to be sacrificed so that others remain profitable. Perhaps it is time to start questioning that ethos, as we are all entitled to earn a living.

The situation with Zavvi, which previously traded as Virgin Megastores, is even worse, as they owe EUK £106 million - how and more to the point, why the accounts department at EUK allowed this happen is beyond me - they should never have allowed things to get to this stage. If Zavvi fails to pay this debt, then they too could be placed into administration, with the loss of yet more jobs. A statement from the company is expected soon.

In the meantime, with no buyer for Bertrams, the book world is getting very nervous. Publishers are also affected by the demise of EUK, with the wholesaler owing them money, which they are unlikely to receive in a hurry. A total figure of £25 million has been suggested as money owed, with Random House the worst hit. Could this also bring publishers down I wonder - I sincerely hope not.

One does wonder what this whole thing is about and what would happen if Bertrams were to go. This would leave just one major wholesaler, in the shape of Gardners, for the whole book trade, and handful of smaller specialists.

MD Michael Neil has been putting a brave face on things, insisting that it is business as usual and the scaling down of EUK, which has still been supplying some stores, would not affect attempts to find a buyer. Talks are continuing with a number of interested parties and there is no set time scale for the sale. But he added: "We have to be realistic. Christmas is in the way but we want to get a deal done as soon as possible."

The wholesaler, which was bought by EUK in January 2007, has separate financing and has not been affected by EUK's administration. The administrators confirmed that Bertrams will continue to trade as normal, but their situation remains precarious.

Big publishers and distributors agreed with Bertrams last week that the wholesaler would pay cash upfront for stock. Neil admitted that these new terms were affecting business (how can they not), as they can only buy what they know will sell. This is seriously bad news for the smaller publishers, although most requests for their stock will be as special orders and therefore firm sale anyway. This decision is though bound to affect availability of slower selling and niche titles.

I hope that they manage to weather the storm, but if the worst does happen, could this mean the end of wholesalers in our country, or will a new contender emerge, in the form of a smaller company keen for expansion? If so, who could that be? Gardners could not buy Bertrams out, as that would create a monopoly, although if Bertrams do go, there will be a monopoly anyway.

If the publishers fail to get back what they are owed, where will it leave them - these costs will have to be recovered from somewhere, and this will inevitably mean several things - pay freezes for the staff, a cut in advances for authors (especially for first timers), and an increase in cover prices. Will they have to re-negotiate terms with the wholesalers that are left, and with book stores that they supply direct to for core stock? Could this lead to a re-opening of the firm sale debate all round and hasten its introduction, and will that hinder or benefit the small presses?

Questions, questions and no answers.

Black Wednesday for the book world

As the future of wholesaler Bertrams as part of EUK, the wholesaler arm of Woolworths hangs in the balance, the book world is holding its breath to see what happens. The most likely contenders are Lingenbrink, Libri and Koch or Neff - all of them German - or Dutch based Centraal Boekhuis. The strong Euro may make the company look attractive, but Germany in particular and the rest of Europe are like Britain, on the brink of recession, and European banks are tighter on lending than their UK counterparts.

Across the Atlantic and encouraged by the strengthening dollar, Ingram may also be a contender - they already have a presence in the UK via Lightning Source, but the recession in the US is if anything worse than here.

Negotiations also continue for a buyer for the troubled chain of Woolworths stores.

Yesterday I read of the redundancy of Telegraph Literary Editor Sam Leith after ten years service. I wish him well in his future career. Yesterday was not a good day for publishing all round Stateside, being tagged as "black Wednesday", following the news of 35 redundancies from Simon and Schuster and that Thomas Nelson are to shed 10 percent of their staff, effective on Friday. This comes on top of planned re-structuring at Random House. I see as well that the Penguin Group have frozen all 2009 pay rises for staff who earn more than $50,000 (£30,000) a year.

Total sales for America's three largest chains fell 6.3 percent for the quarter ended November 1st, with revenue falling to $1.93 billion. All three have blamed the decline in customer footfall, with sales particularly slow in September and October, traditionally the time for new releases in non-fiction. The book sellers are not alone, with other retailers also feeling the pinch. Both footfall and conversion at the store that I work in have tumbled in recent months. reporting Last Wednesday, the Commerce Department in the US reported that consumer spending fell by 1 percent in October, the steepest decline since 911.

Borders saw the highest drop of all the chains, at 9.4 percent. It also suffered the largest decline in like for like conversion on a branch by branch basis. CEO George Jones said the steeper decline at Borders was due to the company’s aggressive inventory reduction program. He stated that Borders are “fine tuning” their inventory program and have a team in place going from store by store to restore any titles that may have mistakenly been removed.

It is timely that BBC2's Money Programme is set to explore the state of the publishing industry in the New Year. The programme will include interviews with Larry Finlay of Transworld, Patrick Janson-Smith of HarperCollins, agent Carole Blake, author Catherine O'Flynn, Luke Brown of Tindal Street, Neill Denny of the Bookseller, and Nicholas Clee of BookBrunch. It will also feature Amanda Ross of Cactus TV, the makers of the Richard and Judy show. I look forward to watching it in due course and seeing what conclusions are reached.

Known commodities

As furniture chain MFI enters administration, it looks as if Woolworths will follow suit. According to the BBC News site tonight, the troubled retailer has buckled under the strain, after weeks of uncertainty, placing 815 stores, and countless jobs in jeporady. The board of Woolies, one of the UK's oldest chains, have been in talks since 1800 hours to make the formal decision and announcement, which will no doubt come by morning.

Thankfully wholesaler Bertrams is unaffected by this decision, and for them at least, it is business as usual.

In the meantime, and just to underlie how volatile the publishing business it, US publisher Houghton Mifflin Harcourt has closed its doors to any new acquisitions, in a move that has rattled agents throughout the industry. At the other end of the spectrum, it has emerged that the Hachette Group, whose stable encompasses names as Little Brown and Grand Central Publishing, are giving a bonus equivalent to one weeks salary to each of their employees.

If things were already bad for first time authors, struggling to find a deal, they were dealt an ever bigger blow when literary agent Esther Newberg said “It is seriously going to be a time for known commodities,” in case anyone might consider self publishing instead, she went on to say "I would hate to be starting out in the business.”

Even Google is not immune. The company is reducing its 10,000 strong army of contractors, in an effort to cut costs. A spokesman for the company admitted that they had been considering this for some time, since such staff, who make up a third of their workforce, are easier to shed.

Borders hit by Icelandic banking crisis

As print on demand company Lulu make 24 people redundant at the UK site, due to the credit crunch, Amazon seem (unfortunately) to be going from strength to strength with their profits going up with each successive quarter. This has by all accounts, been a highly successful year for them - with the acquisition of social networking site Shelfari, and the launch in the United States, of the Kindle e-reading device. I see now that they have now been awarded a US patent for "creating an incentive to author useful item reviews."

The patent describes a method of "rewarding the authors of reviews found to be useful by their readers, such as by prominently displaying their names and ranks as authors of useful reviews prominently on the web merchant's web site." In practise this means giving customers badges for writing product reviews based on whether or not others found their submission useful. This is I suppose, Amazon's way of saying thank you (pity they didn't think to thank all us authors for writing the books that they sell at such ridiculous discounts and screwing us out of the opportunity to sell them at cheaper than they do - see the Booksurge contract in yesterday's post).

The funny thing is that back in 2000, Jeff Bezos called for "fewer patents, of higher average quality." Exactly what his definition of average is, is obviously different to the rest of us ... Why anyone is surprised by this backtrack is beyond me, for like politicians, it is all he seems to do. He stated not that long ago that Amazon had no plans to implement their POD "service" in the UK, but we all took that with a pinch of salt, and quite rightly so, given my two posts of yesterday. Some time ago, in an interview with the New York Times, he declared that books were like horses, as both were perfect things that were difficult to improve upon. It seems to me that he spends most of his time talking out of that same thing that horses s*** through.

Things may be good for Amazon, but they are far from good for troubled book chain, Borders, which has found itself emboiled in the Icelandic banking crisis. The retailer - which secured a £23 million asset-based loan from Landsbanki Island earlier this year, also has an overdraft facility with the bank, which has been taken over by Iceland's Financial Services Authority. Its links with Landsbanki could have long term implications for Borders UK's access to working capital, although the impact is as yet unclear.

The chain could find their working capital severely restricted during the most critical trading period of the year, while the Icelandic Government decides what to do with the banks international operations. Speculation is rife, with one suggesiton that Borders may be asked to pay back some of the £23 million loan. The problem is that this is secured by the stock that is held in both the company's stores, and its distribution centre (recently closed) in Truro.

At the time that this loan was announced, in February, Mark Raban, who was Borders' Finance Director, said: "Landsbanki were able to offer flexibility and complete the deal quickly. We are confident the deal puts us on a strong footing for future success." I bet he is eating those words now.

While I would hate to see the demise of the chain, and the resultant loss of jobs, it would in many ways be not unexpected. Borders seem to have lost something in recent years - they used to be a good company to deal with and to shop with, but the stores now seem tatty and out of date, with the shelves stocked full of books that no one wants to buy. Whether the closure of the Truro centre will make a difference is difficult to tell, in theory it should, for the smaller presses and self publishers at least, since the staff will no longer be able to fob you off by stating that they only buy stock centrally through Head Office. Some titles no doubt are, but they will no longer be able to use this as an excuse to get rid of the savvy self publishers like me, who will challenge them on this, by pointing out that this is not the case, the stock can and is, also obtained from wholesalers, with deliveries direct to stores.

It is once again a case of wait and see. I hope that they can manage to dig their way out, but I fear that this time, their number may be up, leaving just two major book chains in the UK - WH Smiths and Waterstones.