Magazine

Getting Out Of A Bind


At the tiny tome on the Range bookstore in Las Vegas, N.M., nothing gets manager Jillian Rael more steamed than when customers tell her they won't wait a week for a book to arrive on order. They would rather drive the hour or so to Santa Fe to buy it sooner at a chain store. The 10-year-old Tome's location in the foothills of the Sangre de Cristo Mountains makes it tough to restock quickly. On top of that, to fill orders, Rael says she often has to buy more books than she needs to meet publishers' quotas, only to send them back. "The system is pretty darn inefficient," fumes Rael. "It hurts us and the customers."

Now the two-decade-old concept of just-in-time inventory is catching up to the antiquated book biz. A new scheme set to be announced in early April, dubbed the Caravan Project, calls for books to be delivered simultaneously in five formats -- hardcover, digital, audio, print-on-demand, and by chapter. The initiative is the brainchild of Peter Osnos, a publishing veteran and founder of non-fiction imprint PublicAffairs. He figures that publishing's ancient habits are holding it back, keeping it "some sort of relic to Gutenberg." Following the lead of Hollywood mavericks such as billionaire producer and theater owner Mark Cuban, who advocates releasing movies on the same day to theaters, on DVDs, and to TV, Osnos argues that readers should be able to read books when and how they want. By creating a menu of choices for consumers (table), the industry could go a long way toward making the distribution of its books more cost-efficient. "The technology is here," says Osnos, 62, a onetime foreign correspondent at The Washington Post. "We just needed a coherent approach. We have one now."

NAPSTER NIGHTMARES

Six nonprofit publishers (three are university presses), No. 2 retailer Borders Group (BGP), a few independent bookstores (not Tome on the Range, however), and publishing wholesale powerhouse Ingram Industries are participating in Caravan. The first step: Publish 24 books initially across the five formats in early 2007. Funded by a $250,000 MacArthur Foundation grant, the project is relatively small, Osnos admits. "But we don't have to be big," he adds. "We just have to show that this model is irresistible to everyone in the chain -- to authors, publishers, and booksellers. We can't continue to print 10 books to sell 6." Adds Tom Dwyer, director for adult trade books at Borders: "We never want to underestimate the public's desire for information and choices. This lets us put our foot in the water."

But talk of going this far this fast unnerves publishers. Publishing giants such as Random House and HarperCollins Publishers (NWS) already feel huge pressure to sell digital versions of their books, especially from Google (GOOG) and Yahoo! (YHOO), which want to deliver books the same way. They argue they are moving in the right direction. Audio books, while expensive to produce, have been around for years, they say, and the quality of print-on-demand books has improved. Just the same, "they are terrified of being Napsterized," says Al Greco, senior researcher for the nonprofit trade outfit Book Industry Study Group. "So turning over their books to electronic files for use in print-on-demand may not be viable because of the risks."

The all-at-once approach is also scaring some authors, who prefer the release of just the hardcover first. "At the risk of sounding vulgar, I make more royalties when a book is sold in hardback," says Simon Winchester, whose latest work, A Crack in the Edge of the World: America and the Great California Earthquake of 1906, was published in October. Still in hardcover, it could see a surge in sales from publicity surrounding the disaster's centennial in April. Coming out in many formats on the same day, Winchester says, is akin to "a film going straight to video."

But the industry could see as much as a 15% increase in net sales under the Caravan Project model, Osnos projects. Sales of all books in the U.S. last year were $25 billion, according to the Association of American Publishers, up 10% from 2004. Not only would publishers see a bump from additional sales of more audio and digital offerings, Osnos figures, but print-on-demand would help cut down on large returns of inventory. Last year 33% of adult hardcovers were returned by stores to publishers, says the Book Industry Study Group. Publishers have never been good at gauging demand, and returns -- known in the industry as "rotting fruit" -- have been a big drain on profits.

Having the ability to quickly print and deliver books on demand, eventually using in-store kiosks, could help tremendously. Osnos says that could be invaluable to a seller, especially after a wave of publicity ratchets up demand. Today a book can be printed and glued together in under 10 minutes and shipped out in 24 hours, says J. Kirby Best, president and CEO of Lightning Source Inc., the print-on-demand unit of Ingram.

Making books available in more ways could even help ease the industry's other chronic headache -- booming used-book sales, which, at more than $2 billion a year, deliver no royalties to publishers and authors. "There is no reason for you to go into a store," says Osnos, "ask for a book, and not leave with it."

By Tom Lowry


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