PW spoke to two veterans of the bargain sector of the business—Robin Moody, president of Daedalus Books, and Jeffrey Press, president of World Publications Group—to get their take on the current climate and what activity we can expect in the future.
Moody, who has been in the remainder business for 31 years and with Daedalus for 28, ticks off four major changes in the book industry as a whole that have impacted bargain business: “First, the rise of the chains and the diminution of the independent bookstore. Second, the increased focus on bestsellers and the demise of industry regard for non-bestsellers, mainly a function of the takeover and consolidation of independent publishing by large corporate media. Third, the effect of the Internet, both on competition and information. This has been so pervasive that bookstore buyers often use Amazon to make their decisions. And fourth, the effect of so many competing forms of entertainment and sources of information has reduced the centrality of the book in people's lives.”
Then, Moody continues, there are three things that have affected the bargain/remainder business specifically: “1) The explosion of the availability of hurts has undermined the market for real remainders. It seems as if all publishers have decided it doesn't pay to reshelve returns, so the amount of 'hurt' inventory on the market is overwhelming. 2) Publisher remainder/hurt contracts with single houses have completely changed how remainder companies obtain inventory. The future of that paradigm is quite volatile. 3) Promotional publishing programs with world markets have revolutionized the market for visual books. Remainders have become an international business.”
For his part, Press, who founded World Publications almost 25 years ago, says, “The publishing business is like many others—big publishers consolidate and get bigger; big customers consolidate and get bigger. So many of the small retailers and customers are gone. Now, there's such a vast array of different types of customers we work with that it pales in comparison to the few kinds of companies we worked with in the past, mainly book chains.”
Technology lurks behind some of the biggest changes in the business. Moody says, “Everything is so different now. When I started, not only was there no Internet or computer, there wasn't even a fax. Most selling was done over the phone and by personal visit. Our catalogue was our most important selling tool and eagerly awaited by booksellers. Invoicing was done on a typewriter and calculator, and Xeroxed. Inventory was manual. Computers obviously changed all that, but most people don't think about how they took away the advantage of some gifted booksellers, who could keep a huge amount of knowledge about books and inventory in their heads. Prior book knowledge was a great advantage, especially in such a seat-of-the-pants business. Buyers bought using that knowledge and their impressions of how well a book might or should do. There was much more willingness to take a chance on a book because it looked good.”
Moody continues, “Now, of course, people rely more on Amazon and computer-generated sales figures to make decisions. Remainders are bought based on their past performance. If a great book didn't do well because of poor distribution, it barely has a chance as a remainder. Buyers reject a higher percentage of what they are offered as they wait for what's newer and better. We built our company on having a sharp eye for good fiction and literature, but in recent years have deemphasized that, because buyers are not interested in little-known fiction, regardless of quality. As we turn more to world markets to make up for what we have lost from independent booksellers in the United States, we focus more on art, photography and visual books, trying to keep the same eye for quality. Our Web site brings in a big percentage of our business these days, and the turnaround of good inventory is much faster. People who look at our site almost every day get books most buyers miss because they're gone so fast. We used to do that with phone calls to our best buyers, but now it's first come, first served. With all the interest in what's new, there is little attention paid to backlist. We have great books that sold like mad in their first month, but the curve of declining sales is much sharper. With the plethora of titles available to the buyer, there is little impulse to repeat titles, even if very successful. We've also diversified by getting into CDs and DVDs, of course trying to bring the same eye for quality and salability to our choices.”
Press says, “Almost all of our competition are getting books direct to consumers on the Internet, mainly through Amazon. We don't sell to consumers, only dealers. It hurts us in some ways because we're not sorting as many hurts to consumers, only to retailers. I personally don't even have a computer at my desk, but when I see our scanners going at the trade shows or see the orders flowing in from our Web site, I'm thankful for the technology. Even our brand-new sorting Web site, www.worldsorts.com, allows us to have an up-to-the-minute live inventory available to customers and it lets them shop at their convenience.”
Though the economy is not exactly going gangbusters, bargain/remainder books can sometimes benefit from a downturn in the economy, as they represent a money-saving opportunity for consumers. Moody says, however, that general economic cycles don't impact the business much at all. He adds, “We do more or less business based almost completely on the level and quality of inventory we get. I don't see publishers remaindering more or less these days based on cycles. They used to, when they were independent and their cash flow wasn't that of a mega-corporation, but all that has changed. During a downturn, sales everywhere are lower, but maybe remainder sales in stores kick up a little bit, so it evens out for us.” He also says that this year has been the strongest for Daedalus since 2004.
But Press believes that bad general economic news is good news for the bargain books business, adding, “We are booming this year since consumers are looking to save money.”
When asked to look into his metaphorical crystal ball, Press focuses on his company and sees a rosy future, with a new generation of workers and a newly inaugurated—and enormous—workspace. Press says, “This year is our first full year in our new 300,000-square-foot distribution center. We are more efficient than ever and are poised to grow. For World, we see a very bright future ahead, especially now that all three of my children, Samantha, Melissa and Michael, are working in the business. There's a whole new generation of people entering the industry and trying to keep up with us old-school guys.”
Moody surveys the industry as a whole and observes, “The near future may see some consolidation as the impact of large houses selling all their remainders to a single company plays out. As it gets harder for some companies to find good books, a few may fold. Publishers may find, when they need to return to bidding, that there are only a few players left to buy their books. The fact that the chains and large buyers focus so hard on bestsellers means that those who can't compete for those books are fighting for ever-diminishing dollars from independents and non-bookstores. I also see a gradual dumbing-down in the industry; there are fewer and fewer knowledgeable readers involved in what gets bought and sold. Finally, the '60s generation gave a strong belt of vitality to independent bookselling. A lot of people who started in the business in the '60s and '70s are getting to retirement age. I wouldn't be surprised if more stores close because of a generational change.”
But these two old hands do agree that bargain books are here to stay. Press laughingly admits that he hasn't always been so optimistic, noting, “When we started 24 years ago, I doubted the remainder world would exist in 10 years.”
Says Moody, “As long as there are trade books—which I believe will survive technology, but in a diminished role—there will be remainders. It is impossible for publishers to consistently guess the proper print runs of its books, so there will always be remainders. My greatest concern about the future is for bookstores themselves. If readers want to be able to browse a bookstore, but buy their books online, they are unwittingly bringing about a day when there are too few bookstores to support publishing certain kinds of books, which will change what gets published in a very negative way. There's a cause and effect that will start a chain reaction that will be difficult to stop. And corporate publishing doesn't care.”
