Extruded Books: a cautionary tale

For some thirty years now, I have been following the commercial publishing industry, particularly in its various New York mutations, and trying (for commercial reasons of my own) to figure out why apparently intelligent people would do business in such cockeyed ways. I don’t pretend to have figured out the whole story, but I have pieced together a good deal of evidence, and I believe I can point out the major turnings in the road that led publishers to the pass they are in today. Rather than bore you, my 3.6 Loyal Readers, with dry details and rubbishy statistics, I shall shamelessly exploit my status as a spinner of tall tales to set forth the data under cover of a fictitious example. All names have been changed to protect the manifestly guilty; so let me introduce you to Nathan Extruded, founder and publisher of Extruded Books.

Nathan Extruded cut his teeth as an editor for Crapsack Books in the 1960s, rising to become Senior Editor of their science fiction line. In 1974, he jumped ship to found his own imprint under the auspices of a different major publisher, which, several mergers later, would emerge as a division of a Big Six publishing conglomerate. Extruded Books released its first titles in 1975, and was just becoming familiar to the SF-reading public when the great SF boom of the late 1970s increased its business by an order of magnitude.

Let us look at Extruded Books as it was in the early 1980s. All its books are published as paperback originals. Genre writers prefer to deal directly with paperback houses, because most of the money is in paperback sales and a hardcover publisher routinely pockets half the royalties from any paperback edition of its books. A couple of daring young genre publishers are experimenting with combined hard- and soft-cover deals, giving the writer all the royalties from both formats, but Nathan Extruded isn’t in that game yet. His imprint is only one small division of Maw & Tentacle, Inc., whose (much older and more prestigious) hardcover imprints are jealous of their turf. He would love to print Extruded hardcovers but simply can’t get permission.

As a mid-sized SF publisher, Extruded releases eight titles per month, every month, without fail. This is because the majority of paperback sales still happen through supermarkets, newsstands, pharmacies, mom-and-pop stores, and other general retailers, which are served by a national network of distributors and rack-jobbers. That means most paperbacks are still displayed on old-fashioned wire racks, with strictly limited space in each; monthly rack slots are a prized commodity. Maw & Tentacle has control of about sixty rack slots for all its various paperback imprints, and Extruded receives eight of those, strictly rationed.

If Nathan wants to publish nine books in a month, too bad: a paperback simply won’t sell enough copies to break even unless it gets wide distribution through the rack-jobbers. If he only wants to publish seven, even worse: Maw & Tentacle will simply take away the unused slot and assign it to a different imprint, rather than let some other publishing company take it away from them. Once you lose a rack slot, you may never get it back.

In a typical month, Extruded puts out a monthly lead title by a name author, which gets some advertising, some hype from the sales force, and a review in Publishers Weekly — a favourable review, since Maw & Tentacle is a big advertiser and PW knows what is expected of it. Two slots will be taken up by reprints, because a book takes up just as much rack space whether it was written yesterday or forty years ago. When Extruded releases the third volume of Tracy Tolkienesque’s bestselling Baron of the Bracelets series, the reprint slots will go to the first two volumes, because there is nothing a fantasy reader hates so much as buying Book Three and being unable to find the first two. The last five slots go to midlist writers of various sizes and degrees.

Just to be on the safe side, Extruded likes to buy those midlist books a year or two in advance, so that if an emergency occurs, or a writer flakes out and misses a hard deadline, there will always be another book in the pipeline ready for release. Nathan keeps a few reliable hack writers under contract for just such eventualities. If all else fails, he can give his #8 slot to the latest instalment of Joe Potboiler’s ongoing saga, Zap Guns of Planet Derivative. This will be Book Eighteen of the series, and the first seventeen are long since out of print. Since readers hate that, each Zap Guns book is a guaranteed money-loser; but it earns its keep by occupying that all-important rack slot, warming the bench, so to speak, until next month’s list comes along. Better to publish a sure-fire loser than to cut back permanently to seven books a month.

All of Extruded Books’ practices are fine-tuned for this way of doing business. For instance, unlike the hardcover imprints higher up Maw & Tentacle’s food chain, Extruded accepts unsolicited manuscripts, which means that Nathan hires summer interns at minimum wage to read slush for him. Someone has to take Joe Potboiler’s spot when he finally dies of malnutrition after eighteen years on a Ramen noodle diet. But this is a low priority. Extruded prints maybe one or two books a year from the slush pile, and though Nathan would never be so foolish as to admit it in public, those books are kept in semi-permanent limbo and only released when there is a vacancy in the list that even Joe Potboiler can’t fill. Once he kept a slush manuscript for four years after acceptance before finally putting it into print. And of course, thirty days later it was out of print again. It had served its purpose; and so had its author.

We skip ahead in time, pausing for a moment in 1986. That year, Maw & Tentacle finally caves in and lets Extruded publish its own hardcovers, after Tracy Tolkienesque threatens to leave them for a hard-and-softcover deal with Tor. Now Extruded does twelve hardcovers a year, and with rare exceptions, those books become the monthly paperback leaders for the following year. Business is good, but expenses are rising, because that ever-present slush pile keeps getting harder to deal with. Now that every writer has a desktop computer, even the worst manuscripts are correctly formatted and neatly printed, unlike the old days, when the real stinkers were scribbled in red crayon on something that looked like paper napkins. But there are always plenty of English majors willing to work for minimum wage, with the prospect of getting a real editorial job if they discover a hot new writer in the slush. That actually happened once.

Fast forward to the mid-1990s. The business is in turmoil, thanks to an idiotic decision by Safeway — for Walmart is not yet in the grocery business. Safeway decided to fire all its rack-jobbers and buy direct from the publishers. In theory, this eliminates an unproductive middleman. In practice, the rack-jobbers were the only people who knew what books would sell best in each city and state across the country. Safeway bought the same books for all its stores nationwide, and was astonished to discover that what sells in San Francisco is poison in Peoria. Other chain stores took their buying in-house, fearing that the rack-jobbers would go out of business, and in a couple of years this became a self-fulfilling prophecy. Many smaller stores have simply stopped carrying books, and the supermarkets and drug stores are carrying far fewer titles. For the first time, most paperback sales go through actual bookshops. This gives far too much power to a new broker in the industry: the chain-store buyer.

Extruded Books still releases eight titles a month, but it no longer has guaranteed distribution for any of them. In order to sell the monthly leaders in quantity, Nathan has to cough up money for co-ops and end placements — basically, to pay rent for shelf space. Beyond that, it is the handful of chain buyers who decide which books they will carry and which ones die on the presses. Tracy Tolkienesque is in high dudgeon because her latest book, Manley Masculine and His He-Manly Phallic Sword, has a cover illo of a buxom blonde bimbo in a chainmail bikini, with Manley Masculine nowhere in sight. Nathan tries to explain to her that it is a Scientific Fact that books with blonde bimbos on the cover sell better than books with hulking barbarian swordsmen. Actually, the problem is that the people who buy SF for the chain stores are dirty old men with breast fixations, and are liable to turn down even the surest-fire seller if it hasn’t got boobies on it. This is also why Maw & Tentacle’s romance imprint has so many book covers featuring buxom Regency belles swooning in their lovers’ arms in poses that cleverly display all the cleavage exposed by their low-cut ball gowns. (But all is not hopeless. Soon the romance buyers will be replaced by dirty old women, and the covers will begin to feature shirtless male models instead.)

The central problem remains: Not every book gets adequate distribution, and as a result, sales are down. Since modern computer technology has made it cheaper and easier to publish a single title, Extruded Books increases its output to twelve titles per month, figuring that each chain will pick and choose enough of them to pay the bills. A little later, it goes to sixteen titles per month, with the full knowledge that the bottom two or three titles will not be printed at all. They’ll be scheduled, all right, but will not receive enough advance orders to justify even a minimal print run. This practice is known in the trade as ‘skipping’. Nathan hasn’t got the budget to hire extra editorial staff, but despite their grumbling, his existing editors can just about handle the workload — as long as they aren’t expected to actually edit the books they buy. But, hey, that’s what spellcheckers are for.

Move on again to 2003. The big-box stores are the only brick-and-mortar outlets that still buy midlist books in quantity, and Extruded is entirely at their mercy. Amazon.com will sell anything Extruded publishes, but they don’t keep large quantities of inventory, and Nathan can’t justify a paperback print run based on that. Now Extruded is scheduling twenty-four titles a month and actually releasing about twenty. All the senior editors have quit to take less stressful and better-paying jobs as rickshaw-pullers in the Himalayas, but there’s always a fresh crop of interns to replace them. Extruded no longer accepts unagented submissions, but the slush pile is bigger than ever, because agents are taking on unpublished writers — someone has to! — and then spamming every house in New York with simultaneous submissions, where unagented writers had to submit to one publisher at a time.

Tracy Tolkienesque is throwing a positive tantrum because her latest manuscript languished in the editor’s in-box for fourteen months before it was read and accepted; but then, Tracy Tolkienesque isn’t the big seller that she used to be. Her next book is scheduled for release two and a half years after acceptance, and if she doesn’t like it, she can change her name to Rowling. New writers are lucky if their agented submissions are read within a couple of years. At this point, most of Extruded’s new releases come out in trade paperback and never make it to mass-market, because frankly, Borders and Barnes & Noble will never buy in enough copies to justify a mass-market printing. Besides, if you’re only going to sell 5000 copies of a book, far better to sell a $16 yuppieback than an $8 mass-market edition. Gone, long gone, are the days when a book that sold only 25,000 copies in paper was a flop. Despite all these difficulties, Extruded somehow manages to earn enough profit to satisfy its new corporate overlord — Maw & Tentacle having merged with Gargantuan Media to form a new conglomerate, GargantuMaw.

Now we arrive at 2010. Nathan Extruded is semi-retired now, a figurehead for an imprint that is really run by a bright young MBA from the Frankfurt head office of Greedhead Cheeseparer HackGrind GargantuMaw FifthReich GmbH. (Don’t worry, they’ve gone to a corporate branding consultant for help, and the whole behemoth is about to be renamed BixBoox.) There is a new thingy on the market called ebooks, which nobody really seems to understand. Books are books, dammit, they’re printed on paper, and how the hell do you control something that can be copied just by transmitting it over the Internet, anyway?

Extruded Books, in lockstep with all the other hundreds of imprints of G.C.HG.GM.FR. GmbH and the other cartel publishers, has just seized the ebook rights of hundreds of authors who never agreed to sell any such rights in the contracts they signed. This is of course right and necessary, because as long as an ebook edition of a work is offered for sale, it can never technically go out of print; which means that the rights will never revert to the author. Just the other day, Extruded made a cool hundred grand from the movie rights to a book that it controlled in this way. The paper edition was pulped and recycled four years ago, and the ebook has sold a total of six copies, but by golly it’s ‘in print’ by the letter of the law — at least the way G.C.HG.GM.FR. GmbH chooses to interpret it. And what writer can afford enough lawyers to prove them wrong?

But there is a cloud on this bright horizon. Two clouds, in fact. For one, physical bookshops are falling like dominoes, and Borders itself is teetering on the brink of bankruptcy. Books are being shipped and not paid for, and cash flow is painfully hard to come by. For another, Amazon seems to think that these ebook things have a right to exist and that they ought to be sold for a price that reflects the utter absence of printing, shipping, or any other physical production cost. The imprint’s current bestseller, Shiny Sexy Cannibal Zombies by Psyche O’Path, is available in hardcover and ebook at a list price of $29.99, wholesale $14.99. But for some reason, Amazon wants to sell the ebook edition as a loss-leader for $9.99. Horrors! They’re cannibalizing sales of the hardcover! How can Extruded make money on a very expensively produced product in boards when another edition is being sold for a third of the price? That’s why they don’t release the paperback until the following year, dammit!

Fortunately, that loophole is about to be closed. The Big Six (and BixBoox, née G.C.HG.GM.FR. GmbH) are hammering out a collective agreement with Apple to sell ebooks on an agency model. The publishers will set the price and receive a flat percentage, and in return they will agree not to sell to any other ebook retailer on more favourable terms. Soon Amazon comes to heel and adopts the agency model; that’ll show ’em! Now, instead of selling Shiny Sexy Cannibal Zombies for $9.99 and paying the publisher $14.99, they’ll have to sell it for $14.99 and pay the publisher . . . er . . . $10.49. Extruded Books receives 30 percent less per sale, and since the retail price of the ebook has gone up, there are a lot fewer sales.

And now we come down to April, 2012. Ebook sales, frankly, stink; but since Extruded keeps 75 percent of the net on ebooks sold via agency — 52.5 percent of retail — with basically zero marginal cost per book, profits have taken a modest upward bounce. To guard against any future cannibalization of hardcover sales, all new contracts are being written with a ‘windowing’ clause, stating that no ebook edition can be released anywhere, by anyone, for at least 18 months after the publication date of the original trade book. That gives Extruded time to milk the profits from hardcover, trade paperback, and sometimes even mass-market, before casting the title off to let ebook readers pick the bones.

Then comes the bombshell. Tracy Tolkienesque, who hasn’t sold a book to a commercial publisher since her last Manley Masculine got ‘skipped’ in 2005 (thanks to a chain buyer who didn’t care about boobies), has resurfaced with a self-published ebook series, a sequel to Baron of the Bracelets. In just six months, she has released the whole tetralogy (which would have been spread out over at least five years, if a sensible publisher like Extruded had been in charge), and sold over 500,000 individual volumes at the risible price of $2.99 apiece. Now she is featured in Amazon’s latest SEC filing, delivering a gushing testimonial about the power and freedom bestowed upon authors by Kindle Direct Publishing. ‘Even when I was writing bestsellers in the Eighties, I never made this kind of money,’ she says. Over $150,000 a month, to be precise; and Extruded Books, after all it did for her career, doesn’t get a penny.

How can this be? For 36 years, Extruded Books has been making money off its carefully designated and walled-off share of Big Publishing’s monopoly on commercial book distribution. All their business practices were carefully designed to protect that delicate jugular, to keep small presses and vanity publishers out of the bookshops and out of the public eye. They might not be able to create bestsellers, but they certainly had the power to prevent them. And now this raddled old hack does an end run around the entire system! How dare she? How dare Amazon? They’re all in this together! Damn you people, don’t you know that distribution is expensive? It’s all about the rack slots! OK, so rack slots as such haven’t existed since the collapse of the rack-jobbers almost twenty years ago, but the job of a publisher is still the same: to choose, from a multitude of authors and an ocean of manuscripts, just those few books that deserve to be squeezed through the bottleneck of distribution and delivered to the public.

Somehow, BixBoox and the rest of the major publishing conglomerates have to recapture control. Somehow, they have to stop these self-published yahoos from circumventing the tried and true channels of the industry. People like Tolkienesque have no right to do such things. Hell, there’s probably a law of physics against it; and if not, there should certainly be an act of Congress. And if we let her get away with it, what could happen next? Psyche O’Path might jump ship!

These people must be stopped! Where’s King Canute when you need him? And now, here comes the Department of Justice, saying that the Big Six publishers are acting in restraint of trade, and the agency model can’t be enforced on any retailer who wants to set their own prices. There must be a solution that will restore publishers’ control of the channels of distribution. Writers are easy, books are cheap, but distribution is hard and expensive. That’s the way the world is, the way it always was and always will be, per omnia saecula, saecula saeculorum. The alternative is just . . . unthinkable!

Isn’t it?

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