The publishing industry is enduring hard times. And in order to survive, it must rewrite the book on how it does business.


  • Image about Emily Powell
It’s just another recessionary autumn afternoon in Portland, Ore., though you wouldn’t know it from looking around Powell’s City of Books. The largest independent bookstore in the United States, Powell’s is four stories of new and used books crammed into a former auto dealership that takes up an entire city block. Since its 1971 opening, the bookstore has been the destination for voracious readers from all over the globe, and even at 2:30 p.m. on a weekday, you’ll find a bookworm in nearly every aisle scouring the shelves. Its coffee shop is among the most difficult in town at which to score a table, and as Emily Powell, the company’s vice president, walks in the store, the checkout line is about six people deep, with each person ready to buy no fewer than two books each. The scene makes it seem like the past year’s economic horrors never happened — until you look closer and see how everything has changed.

“We noticed an interesting trend that has helped us,” says Powell, who is also the granddaughter of the bookstore chain’s founder, Walter Powell. “Customers began transitioning from purchasing only new books toward buying more used books, or they would buy trade paper instead of a hardcover.” The result, says Powell, is a bookstore that is as busy as ever but not as profitable as it used to be.

“There’s a different economy behind a $5.95 used book and a $19.95 trade paperback or a $29.95 hardcover,” she says. “So we had to do the same work, handle the same volume of customers and books, for less money.”

These days, however, this is considered good news. When the economy went south and people stopped buying, well, almost everything, bookstores returned massive numbers of unsold books to publishers, who in turn reported record losses and were forced to cut staff. Random House, Doubleday, Simon & Schuster, and Houghton Mifflin Harcourt — venerable names and well-established publishers — all eliminated jobs. Bookstores began to fold across the country. It’s estimated that at least 400 booksellers shuttered their operations in 2009, up 500 percent from the previous year. So it’s encouraging to hear that Powell’s has found a way to stay afloat. “We joke that flat is the new up,” says Powell. “We’ll take flat.”

Things have gotten so bad that John Irving, the writer of best-selling novels such as The World According to Garp and The Cider House Rules, was recently quoted as saying, “If I were 27 and trying to publish my first novel today, I might be tempted to shoot myself.” He went on to say, actually, that he thought books would survive. Publishers and booksellers have reason to be optimistic, because while they struggle to stay afloat, technologies like e-readers and on-demand printing are bringing readers back to books, albeit gradually and via an unusual path.

The first step in saving publishing is to understand what’s wrong with it, and many insiders say the way in which books are printed is the fundamental problem. “Ever since Gutenberg started printing books centuries ago, the book-publishing industry has been based around the simple idea that you print the book first and then you try to sell it,” says David Taylor, president of Lightning Source, the world’s leading print-on-demand and distribution company. Headquartered in Nashville, Tenn., Lightning Source aims to turn publishing around by allowing publishers to sell books before they print them. Publishers currently use economies of scale to reduce the per-unit manufacturing cost of producing a title by printing books by the thousand and then shipping them to bookstores and warehouses all over the world. That means for every title you see on a bookstore shelf, someone essentially had to guess how many copies the world might want. Of course, many factors help in determining the size of the print run (such as past performance of similar titles and advance orders submitted by wholesalers), but ultimately it’s a crapshoot.

The cost of manufacturing is just one factor that contributes to the book’s suggested retail price — and anyone who has bought books recently knows that suggestion is often ignored — especially by large retailers. Jason Boog, editor of the GalleyCat blog on Mediabistro.com, recently had a front-row seat to last fall’s pricing war between Amazon.com and Walmart. “Walmart lowered the price of prerelease copies of what they anticipated to be best-sellers to below $9.99, which is an unthinkable price for a hardcover book,” says Boog. Amazon.com responded by lowering their prices even further, and then it became what Boog calls “a shooting war.” The prices bottomed out around $8.99, he says, for a product that publishers recommend sell for around $25.