Thursday, March 19, 2009

Hachette: From Boom to Bust

Hachette Gets Cheap, Real Cheap
During the deluge of bad news that has pounded the publishing industry in the last six months, one company, Hachette Book Group, has emerged unscathed. Thanks to the popularity of Stephanie Meyer, Malcolm Gladwell, David Sedaris, and Jeff Kinney's Diary of a Wimpy Kid series, not to mention the dozen or so James Patterson best sellers that come out every year, Hachette is sailing through this recession. While Random House, HarperCollins, Houghton Mifflin, and Simon & Schuster were all cutting back, Hachette was handing out bonuses.

I don't begrudge anyone in publishing a bonus and was quite happy to find out that the people I know in Hachette were being rewarded for a magnificent year. Just about everyone connected to the printed word is undervalued and poorly paid, so to see bonuses being doled out during hard times was the feel good story of the Christmas season.

Unfortunately, Hachette has decided to not only withhold their largess from their bookselling partners, but they have instituted severe cutbacks that will cost many independent stores $3,000 in the upcoming year. It turns out they want to improve on their good fortunes, by breaking the backs of the very bookstores that promote and sell their titles.

Yesterday, we were informed that Hachette was eliminating their newsletter co-op program ($2,000), their author events co-op ($200 to $800 per year) and their Emerging Voices program ($200). These were all programs where bookstores acted in concert with Hachette to promote individual titles. We bought display quantities of 40 different titles and advertised them in our email newsletter to earn the $2,000. We hosted events to earn the $200 event co-op fee and, most importantly, we bought 10 copies of books by relatively unknown authors to earn the co-op attached with the Emerging Voices authors.

In most businesses, $3,000 might be a fairly insignificant amount. In the bookselling world where a profit of 2% is considered stellar, it is a critical sum. That's enough money to pay a bookseller for one hour of work every Monday through Saturday all year long. Unfortunately, that's how little booksellers earn. It's enough money that we and other stores have been brainstorming how we can possibly make cuts to save it. Heck, we are even buying cheaper toilet paper and paper towels just to realize a savings of about $1,000.

The worst part of Hachette's moves is that many of these programs are working. We bought 10 copies of Katie Crouch's Girls in Trucks when it appeared on the Emerging Voices last year. It's a book I probably would have brought in only two copies without the Hachette incentive. We have now sold 67 hardbacks and are expecting it to explode in paperback this summer.

"I think the newsletter program really worked," my Hachette rep Randy said. "You would change buys from three to eights. There were titles that you bought tens of that you never would have bought in those quantities without the extra money."

Earlier today I tried to reduce my buy of Giulia Melucci's I Loved, I Lost, I Made Spaghetti, one of this season's Emerging Voices books, from 10 to 3. It's too late. Hachette has already invoiced us. I can tell you in the future we won't look on Hachette's midlist titles with such a generous eye.

As usual, Hachette made it's decisions with very little input. No bookseller input at all from what I can tell. A little over a year ago, Hachette tried to unilaterally impose a case quantity minimum on hot new titles. That ill conceived idea, which now sounds brilliant compared to eliminating most of their co-op, met with such wrath from booksellers it was quickly rescinded.

One can only hope that this initiative meets the same fate. I doubt it. There is simply too much money on the table. It's a shame to see Hachette take their successes for granted and dump on the booksellers who have worked so hard to sell their titles. Something tells me that they won't get much bookseller support when the next tsunami hits the publishing world.


Giulia Melucci said...

I bet you'll sell all ten copies. I'll even put my money where my mouth is. If you don't sell seven by Memorial Day, I'll buy them from you. If you do, you buy another ten. Deal?

Arsen Kashkashian said...


I hope you are right. We are going to try. We've got them, we will try to move them.

Thanks for writing in.

Gwen said...

Rock on, Giulia! You're a good sport.

Amy Sandberg said...

Being about as familiar as one can be with co-op, I was very saddened and distressed to see the news from Hachette last week that they were eliminating all exempt co-op. I am constantly counseling stores to review Hachette titles first (all things being equal) in their newsletters and on their web sites(and to buy the min. quantities), because Hachette offered such generous terms. The idea has been that these reviews lead to greater sales, and we know they lead to increased purchases because of the minimum buy requirement. It would be nice if we could quantify these results, but I know, at least anecdotally, that the sales do improve with reviews.

What's distressing is that removing the appox. $3,000 per year in exempt co-op has a regressive impact. The stores who can afford it least (the indies, especially the smaller indies) get hit the hardest by this change. $3,000 is 1% of a $300,000 revenue, but only a tiny fraction of a $5 million revenue.

One last irony: if you multiply $3,000 by the approx. number of indies in the U.S. (200) you come up with a figure of $600,000. 10% of what Tina Fey was paid by LB for her memoir (sans proposal). Love ya Tina, but maybe you could kick back 10% to those who potentially need it more?