SA Publishers Fear Final Chapter

The decision of one major national book retailer to “rationalise” their suppliers could close the book on many of the state’s publishing houses, writes Greg Barila

This article was first published in Adelaide's (now defunct) The Independent Weekly newspaper.

This is a story that’s both shocking and true, and one with its own heroes and villains. Once upon a time, a major national book retailer wrote to a number of its suppliers with a pointed ultimatum; pay for the privilege of staying on our suppliers’ list or a major outlet for your titles will be slammed shut.

Flabbergasted, the suppliers – many of them small, independent and struggling publishing houses – flipped to the end to find the sting in the tale of what had to be an elaborate joke. 

There wasn’t one.  The reality was there in black and white.

“We have concluded that we have far too many suppliers and over 40 per cent of our supplier agreements fall below our requirements in terms of profit earned,” Angus & Robertson Whitcoulls group commercial manager Charlie Rimmer penned to one supplier last month.

“Accordingly,” the letter went on, “we will be rationalizing our supplier numbers and setting a minimum earnings ratio of income to trade purchases that we expect to achieve from our suppliers.”

Depending on the supplier, all would be forgiven if A&R received invoices, reportedly ranging between $1500 and $45,000.

In a later statement to the online news email Crikey, A&R Chief Operating Officer Dave Fenlon apologised for the “inappropriate” tone of the letter to suppliers, but not for the company’s decision.

“Despite our best efforts, we too are under increasing pressure to survive as we are squeezed by major department stores and online stores, resulting in our companyowned stores making an operating cash loss this year,” Mr Fenlon explained. 

“Unfortunately we cannot work with every publisher in Australia, particularly if the relationship is not commercially viable for us.

“We are trying to operate a successful bookstore chain and if we cannot strike a balance that allows us to maintain our retail operations, the impacts on the industry will be far greater if we are forced to close stores or drastically cut down titles.”

Around the country, irate publishers have been taking advice on their options in response to the stunning and apparently unprecedented threat by A&R to rationalize those suppliers which, it says, are not putting enough money into its pockets.

In an industry where words are the stock in trade, some very terse ones have already been spoken.

“Blackmail!” some cried. At least one publisher has taken the matter to the Australian Competition and Consumer Commission.

Some say the poor press may tarnish the brand for mum and dad A&R franchisees who had nothing to do with the corporate decision, which relates to company, not to franchise, outlets.  

A&R has given the 47 suppliers to which it sent letters until August 30 to pay up but will be meeting with them individually in the coming weeks in a bid to reach a compromise.

But what would it mean for writers, publishers, distributors, sellers and readers, if there was no fairytale ending?

Some publishers prefer to be philosophical. “Our orders are so small as it is, perhaps we just won’t bother,” Tony Crawford of small Adelaide publisher Crawford House says.

“I’d prefer to just miss out on A&R sales,” Crawford says.

“We’d just have to work harder, do lots of promotion, maybe even do self-marketing.Let them go under if they want to, as far as I’m concerned.”

South Australia has a rich and proud publishing history but many in the industry say the A&R bombshell is merely another chapter in its struggle to survive in the face of multiple challenges.

In March, US book chain giant Borders announced plans to sell its outlets in the UK, New Zealand and Australia, in an effort to concentrate on its ailing North American operations.

The company has one shop in Adelaide, in the Rundle Mall.

Many in the industry are confident another major chain will buy and re-badge the shops but 
whether that happens remains to be seen.

Here is an industry with the same kinds of risks movie and record companies face when producing a piece of art, often sans the security blanket of substantial cash investments or even the fairly reliable income stream newspapers can generate through advertising.

It is an industry, too, where achieving the success of a best-selling book can also cruelly threaten to send a struggling publisher to the wall through the costs of multiple print runs.

Adelaide has a half dozen mainstream publishers and a number of education and micro-publishers, each turning out between five and 40 books a year. They publish everything from academic text books to cook books and science fiction.

And at least some of them also serve another important function; they strive to publish new Australian writers, local history and obscure-yet-important works that many larger publishers won’t touch.

The same is true interstate. This year’s Miles Franklin Award winner, Alexis Wright, was turned down by a number of large publishers before small Sydney company Giramondo took a chance on her book about her homeland, Carpentaria. Publishing may have always been a low-margin game.

But with rising costs, advances in the ease and quality of self-publishing and difficulty getting shelf space in the major chains, some smaller publishers say they are feeling the pinch.

“It may mean the end of some of them,” SA Writers’ Centre spokeswoman Jude Aquilina says. “I mean, they’re struggling as it is with sites such as lulu.com, which publish books online for free, all you do is pay for the book when it comes,” Ms Aquilina says.

 “The stigma of self-publishing has evaporated these days because the quality of the product is so good.”

That may be true but Stephanie Johnston, a director of Kent Town publisher/ distributor Wakefield Press, says a couple of larger, more powerful forces are at work.

You might say the industry is under attack from all sides,” Ms Johnston says.

“What’s happening, in general, in the industry is sales are shifting to all the supermarket 
chains – K-Mart, Big W and Target – those big supermarket chains tend to generally deal with only half a dozen suppliers. 

“That’s been happening over time; certainly that’s what has affected chains like A&R because they don’t know what they are anymore, the heavy discounts (offered by supermarkets) mean it’s hard to make a profit for the bigger chains.

“The other trend is going the way of (online US shopping site) Amazon. 

“That cuts out a whole lot of small, independent Australian publishers because in order to be stocked by Amazon, we have to have books in a warehouse in America.”

To stay alive in such a climate, Wakefield has found itself doing “10 times” the work to sell three times less the volume of books it could sell 18 years ago.

And the margins can be paper thin. On a book with $30 on the cover, the publisher and author can expect to make about $3 each per copy, after costs.

“We were commonly printing three to five thousand copies of a book and now we’re more likely to print one to two thousand copies,” Ms Johnston says.

She says it is also important to take on a “mix” of projects with broader appeal, including buying book rights from overseas, allowing the company to invest in its own longer-term projects.

Michaela Andreyev of Hindmarsh nonfiction publisher East Street Publications, also sees the importance of publishing to a wide audience and says success can also depend on your business model.

While Wakefield distributes its own titles, East Street books are distributed through fellow SA firm Bookwise International.

“So we don’t have those charges of running a sales force and obviously the material costs of that,” Ms Andreyev says.

She is also philosophical about the possibility of being shut out of big chains, where independent, niche publications were perhaps not major sellers in the first place. 

“If the books don’t sell there, they’ll sell somewhere else,” Ms Andreyev says.

“Readers want more than just the best-sellers, A & R has set themselves up to become a 
Big W or a K-mart who cherry pick the biggest titles.

“So anyone actually interested in buying books more widely is not going to visit them if the consequence of their action is to limit their range.”

The end of that story remains to be written. In a fairytale world, the players, big and small, in this story would all live happily ever after, but life is often much more interesting than that.