< back to full list of articles
Disruptions: Why Book Publishers Fail

or Article Tags


by Rudy Shur, Founder, Square One Publishers —

Rudy Shur

Learning how publishers fail can help you avoid some of the most common pitfalls you didn’t know existed.

When I started publishing books on my own, I was young, ambitious, and thought I knew the book industry. Looking back at that time, two out of three weren’t that bad. The more I worked as a small indie publisher, the more I came to realize I had a lot more to learn. One of the things I did back then was to read as many newsletters and magazines that dealt with our industry as I could. I did that not necessarily to learn about how publishers became successful—I never trusted those stories—but, rather, why publishers failed. The thing about these stories was there was no hype in these articles, only the unvarnished truth about how a company lost control of its operation. I found many of these stories helped me avoid some of the most common pitfalls I didn’t know existed.

In reading today’s trade journals and e-newsletters, it seems there are a lot fewer stories focused on business failures, although I don’t think there are any fewer today then there were back then. So, if you’re not going to read 20-year-old trade magazines, I would like to share some of the major pitfalls that made headlines—and are still as valuable today as they were then—as well as one of my own close calls.

Understanding Sell-Throughs

There was a small publisher in New York that seemed to hit it big. The distributor that represented their line of titles received an order from a bookstore chain for 10,000 copies of one of its titles that had an indirect connection to a hot national news story. The publisher did not have enough books on hand, so they immediately had their printer run 12,000 copies, just in case they needed more. Three weeks later, they received another request from their distributor for another 5,000 copies. They printed 6,000 copies and, two weeks after that, another order and another printing.

Halfway through their third printing, they received word that they would be receiving back approximately 10,000 copies. They called their printer to stop that last printing, but the book had been run. Within three weeks, that publisher was forced to declare bankruptcy.

The Lesson

When you get an unexpectedly large order from a bookstore chain, always ask the store buyer or your distributor’s rep how many copies have sold through, meaning how many copies have actually been purchased by customers before doing the next reprint. Unexpected returns have been the death of many publishers.

Success Can Kill

In the early 1990s, a Midwestern publisher had the good fortune to create a highly successful series of books to teach readers the basics of computers, later expanding into dozens of other areas. For almost a decade, the company became number one in the subject areas of books it produced. It seemed that all it had to do was place the series name on the cover and no matter what topic it covered, the book sold.

At a certain point, the company wanted to become a major player; in order to do that, it chose to double the size of its list by buying the rights to reprint other publishers’ series under its series name. The company also signed and published even more books within the series on almost any and all topics.

Unfortunately, these new markets/audiences responded very poorly even under the series name. Because of the cost of the expansion and the books’ poor sales, the company was forced to sell the business to their distributor.

The Lesson

If you are going to expand your list of books into new areas, always make sure you understand your audience and your marketplaces. Consider test marketing a title to learn whether the title will appeal to the consumer you are trying to reach.

Where’s the Money?

A common problem that brings down many publishers is not understanding the economic structure of publishing books. As a publishing house grows, its owner looks at its expenditures and income to judge its level of success. A company may grow 10-20% each year, but, at the end of the year, while the company shows a real profit on its IRS filing, its bank account is empty. What has the owner missed?

The answer is found in the cost of inventory. Not only does it cost money to produce new books, it also costs money to maintain existing inventory. So, while a company can show a profit each year, all that “profit” gets sucked up in inventory.

Of course, telling the IRS agent that the company’s profit is sitting in a warehouse is not likely going to help you avoid having to pay taxes on money that is not there. And, no, they will not take payment in the form of books—I asked.

The Lesson

The business structure of a book publisher is very different from almost any other business operations. From having to wait anywhere from 90 to 120 days to get paid to having to accept returned books in any condition does not provide for the best environment for a commercial house to thrive. However, by understanding and managing the businesses profit and loss (P&L), along with its inventory, you can avoid this very common pitfall.

Too Good to Be True

A few years back, I received a call from another publisher who said that he was going to set up a spinner rack program in specialty stores throughout the country. It turned out he had a few books in that area of interest, but we had more. He told me he had spoken to another publisher who suggested he call me.

After several conversations, he provided me with a list of titles he wanted for his program, along with the number of books he would need to fill the racks. The numbers were very sizeable, and it appeared to be a golden opportunity. Before I would agree to participate, I wanted to know what the cost would be to print all the books he would need.

I called my printing representative, who I had worked with for years, and ran all the numbers by him. He was obviously excited to get such a large order, if it was going to happen. He then did something I don’t think many reps would have done. He asked me why I needed so many books printed. I told him why and he asked if I would mind telling him who the person was behind the program. I asked him to keep it between us, and I told him the name of the gentleman. There was nothing but silence on the other end. For a minute, I thought the line had gone dead. After my saying “hello” a few times, he responded.

He said he knew of this publisher only by reputation. Apparently, many reps knew of him. He was someone known to never pay his printing bills. He then told me to walk away from this deal as quickly as I could. I did, but, in the meantime, I called the other publisher who had recommended my company to him in the first place. I wanted to let him know what I had been told. That publisher’s response was that it was too good of an opportunity to pass up, and he was going ahead with the program period.

As it turned out, the publisher I warned never did get paid, and a few years later was forced to sell his company.

The Lesson

There are always interesting opportunities that publishers come across in our business. They come in any different forms—from special promotions to unique distribution programs. Some of them turn out to be successful, while others place all the risks and the costs on the shoulders of the publisher. Before you agree to any of these “opportunities,” always make sure you do your due diligence beforehand.

Pitfalls like these are unfortunately all too common in our industry. As independent publishers, we tend to work on our own. Without someone to provide a clear warning, it is easy to fall into one of these scenarios. One of the reasons I joined IBPA (then PMA) was to learn as much about publishing books as possible. But, as it turned out, there was more. What I found were other helpful indie publishers who I could rely on to ask those important questions when I needed to do my own due diligence. And even with all this said, I have still made my own share of mistakes—but, then again, I probably still have a lot to learn.

Rudy Shur founded Square One Publishers in Garden City Park, New York, where, as publisher, he currently heads the editorial program. For several years, Square One was selected by Publishers Weekly as one of the fastest growing indie publishing houses in the US. Shur is also the author of How to Publish Your Nonfiction Book, 2nd Edition. He lectures extensively on the topic of publishing at numerous universities, colleges, and professional workshops throughout the country.

Connect With Us

1020 Manhattan Beach Blvd., Suite 204 Manhattan Beach, CA 90266
P: 310-546-1818 F: 310-546-3939 E: info@IBPA-online.org
© Independent Book Publishers Association