Powerful Publisher Delivers Grim Statistics

By Cheryl Bolen

The man Romantic Times CEO Kathryn Falk called the most powerful man in publishing told authors, booksellers and readers that publishing is virtually a no-growth industry.

Random House president Phil Pfeffer delivered his remarks recently at RT’s San Antonio "Booked on Romance" symposium.

Though dollar sales of books went up 2.9 percent to $20.1 billion in 1996, price increases exceeded unit growth, Pfeffer said.

Decreases have also been seen in number of mass market book sales, number of storefront book retailers and mall chain booksellers and in planned purchasing of books.

One of the reasons for no growth is that consumers' leisure time is declining. "Americans are working more hours than they ever worked before," Pfeffer said.

Another factor contributing to a decline in reading is acceleration of book prices, which increase faster than other leisure-time products such as VCRs and computers. (Contrary to speculation, computers are not stealing readers. "The reality is reading long passages on the screen is difficult," Pfeffer said.)

Poor promotion can also be blamed for lackluster book sales. Books are not promoted well compared to other consumer products. Pfeffer cited Disney spending $40 million to promote Toy Story. Reviews, talk shows and especially Oprah have helped to promote the book industry, but the industry needs to find better ways to promote itself.

"There are plenty of people in this country who really enjoy reading," Pfeffer said. "We just have to figure out how to get to them."

Pfeffer said editors, publisher and authors "fly blind," only haphazardly guessing at what the public wants to read.

Of course, one of the reasons publishing cannot spend tons to promote is because they are having a tough time making money. Pfeffer blames the following for some of the publishers' financial woes:

! Returns C During the Depression, as an incentive for booksellers to take new books, the publishing industry began taking back unsold books and eating the losses-a practice which continues today. Between 35 and 40 percent of the books going into the industry today are destroyed. "Heaven knows how many trees have been destroyed in the process," Pfeffer said. "I have no silver bullet to solve the returns problem." In addition to absorbing the cost for the wasted books, the publisher also is forced to pay for the return shipments.

! Out-of-control author advances C Spurred by the demand for best-selling authors, publishers are paying exorbitant advances, which fail to earn out. Pfeffer said unearned advances are the biggest expense at Random House, the world's largest publisher (which owns Ballantine and Fawcett). Formerly, best-selling authors carried a publishing house, subsidizing beginning authors. This is no longer true.

! Excess inventory C The stock 'em high theory of book selling is declining, Pfeffer said.

! Shrinking shelf life C Contrary to what a lot of people think. superstores (which now account for 25 percent of book sales just six years after being launched) did not create additional shelf space. Pfeffer even said the superstores "created a difficult environment for our industry." The superstores put pressure on publishers to pay for positioning in "power aisles."

Pfeffer had no easy solutions on how to increase shelf life and profitability, but if anyone can do it, industry watchers say he can.

He's the man who built Ingram's book wholesaler into the industry leader it is today. No wonder he put his volunteer work at Habitat for Humanity on hold to come out of early retirement and steer publishing into the 21st century.

This article first appeared in BAWL Point Pen in April 1998.