Book Business and Environmental Economics: Belated Post #2

Right on target to one of the main points raised in my earlier post, Publishers Weekly featured an article this week entitled “Publishers Getting Serious About the Environment Can global warming help reduce returns?” (by Staff — Publishers Weekly, 7/16/2007). Here is an excerpt:

“Last week, Hachette announced that it will form an environmental board of senior executives to determine ways the company can reduce its environmental impact. An environmental committee will also be created that will include employees who want to be involved in making the company a greener workplace.

Random formed its green committee this spring; it’s chaired by company chairman Peter Olson, with Van Der Laan as deputy chair. The committee has already come up with some day-to-day ways it can contribute to a greener planet, like providing “techno trash” bins on each floor so employees can dispose of cell phones, discs and other digital refuse. Random is also conducting a carbon audit that should be completed by the fall, Van Der Laan said. The audit will help Random better understand the overall impact its business has on the environment and areas where improvements can be made quickly.

Pearson, parent company of Penguin, has pledged to be carbon neutral by 2009, while HarperCollins’s parent company, News Corp., has said it will be carbon neutral by 2010. Penguin chairman John Makinson said the publisher’s contribution to reaching carbon neutrality includes finding ways to lessen its paper consumption through the use of more recycled and other Forest Stewardship (FSC) certified paper and changing work practices by examining such areas as how, and how much, employees travel. To that end, HC, which has its own HarperGreen team, said it is transitioning its sales fleet to hybrid cars when leases expire.

Although the use of more recycled paper can make a significant improvement in the environment, Makinson said lowering returns would also make a huge impact on the planet. Makinson supports the idea of selling certain categories, particularly backlist, nonreturnable, and noted that Penguin has worked out discounting-on-site programs with Barnes & Noble as one way to cut returns. (Amazon already buys many of its titles nonreturnable.)

One company that has already developed an extensive nonreturnable option is Chelsea Green. Eighteen major independent booksellers have signed on to the Chelsea Green Partnership Program, introduced at BookExpo America this year, reports company president Margo Baldwin, and she hopes to interest the chains in the program as well. Under the program, retailers receive a base discount of 50% on all orders and an additional annual credit based upon the amount of business completed during the previous calendar year. Credits can be applied to open or future invoices and to co-op advertising. Baldwin said booksellers like the program not only because of the greater discount, but because they see it can make on impact on reducing waste.”

While there is no question that publishers can make relatively large contributions simply by printing on recycled paper, and adopting energy efficient and green office and warehouse programs (including switching over to compact fluorescent lightbulbs, turning off computers at the end of every workday, encouraging telecommuting, mass transit subsidies for employees, reducing paper waste, using recycled cartons, eliminating plastic tape, etc.)

But overall the largest change that can be implemented will be to change the book economy to reduce or eliminate the inefficiency and waste created by returns. Remember that 30% of all new books are printed, shipped to a warehouse, then shipped to a store, or to a wholesaler, and then returned to the publisher or distributor warehouse and finally shipped out again to a remainder wholesaler or retailer, or shipped to a recycler or landfill. Think of the amount of energy that has been wasted in this process. This does not even count the energy cost of forklifts and pallet jacks within the various warehouses in which returned books are moved around to no good end or purpose.

My next task is to calculate the energy value of returned books. But even without knowing the true energy cost of returns, everyone in the book business knows it is time for change. In the end this change will be driven not by publishers, but by retailers and wholesalers. As the article quoted above notes, nonreturnability is beginning to infiltrate publisher, retailer and wholesaler practices. And we do have successful models for how bookselling could become a nonreturnable business - calendars are currently sold under “shared markdown” terms with “remainder in place terms for liquidation at the end of their effective lives. Books could certainly be sold under similar terms.

The biggest concern in imagining a nonreturnable business for publishers, authors and retailers is how to make carrying new and unproven authors worth the risk for retailers of taking them into their stores in the first place. But this risk exists now in the returnable market. With nonreturnable terms including shared markdown and remainder in place, books that do not succeed will actually be less risky and less expensive to carry than they are now with returnability. The benefits of good data and reporting overwhelm the now obsolete returnable terms invented by Simon & Schuster during the Depression. Contrary to many, I do not think backlist is the place to start. We need to implement new business practices that are environmentally and socially responsible, that also increase the selection of titles that can be found on bookstore shelves. Nonreturnable programs, properly designed, will enable better distribution and more titles available to consumers.

It’s time to change!
Posted by David Wilk on 07/20 at 10:22 PM
Publishing and business in general • (56) CommentsPermalink
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