Independents Falling: Correction or Foreshadowing?

(Your usual Friday hostess, the ever gracious and beautiful J.T. Ellison, leaves this message for all of you: “I’m in New York today on a research trip. It’s my first real trip to the city, a brief two day affair, and I’ll report back on all the excitement next week.” Subbing for her today is one of her very cranky cohorts who has become a little less cranky with this news.)

NAOMI HIRAHARA

First it was news of A Clean Well-Lighted Place closing its doors in San Francisco. And soon after that announcement, it was Cody’s Telegraph in Berkeley. The dam then seemed to break, at least in large cities. Bob and Bob in Palo Alto. Murder Ink in New York City. Dutton’s Beverly Hills. Luis Rodriguez’s Tia Chucha’s Cafe and Cultural Center. Book Soup in South Coast Plaza. And now possibly Dutton’s Brentwood might be erased by redevelopment. 

Changing demographics and pricey real estate, I thought. The impact of Internet sales and chain stores. Increased competition for our recreational time.

Two additional pieces of news that opened January (and we’re only three weeks into the new year) bode badly for publishing, especially in the independent realm—the bankruptcy of Advanced Marketing Services (AMS) and Independent Press Association (IPA).

So what the heck is going on? And for most of us who have never really heard of AMS or IPA (like myself), should this concern us?

The AMS Story

The humble start of AMS follows one of those homespun, rags-to-riches storylines: its first shipment as a book wholesaler was a children’s book, which was delivered to a Price Club from the back of one of the cofounder’s station wagon in 1982. The company quickly grew from there—to being the primary book supplier to four Price Clubs to securing deals with Price Club’s successor, Costco, as well as Sam’s Club and Pace Membership. Large distribution centers were opened in major cities; AMS became a publicly traded company; and international agreements were forged in Great Britain and Mexico. Among the flurry of acquisitions AMS initiated during the past decade was the purchase of Publishers Group West (PGW), the esteemed and largest distributor of independent publishers in North America.

Why has this great behemoth of a company, which boasts $900 million in sales on its website, declared Chapter 11? Evidence of the cracks in the company was revealed in the 2005 conviction of three executives in a scheme to falsify earnings and defrauding publishers of co-op advertising funds (news release, Office of the U.S. Attorney, Southern District of California). Leadership also went through a merry-go-round of changes.

Perseus Books Group has stepped in to offer distribution rights for PGW clients, many of them small presses whose survival greatly depends on recouping both the monies and inventory owed to them during the last quarter of 2006, arguably the most profitable season for publishers. (Perseus actually will be acquiring a PGW client, Avalon Publishing Group, which includes Caroll & Graf.)

An AMS creditor’s committee has also been formed, comprised of Random House, Penguin, Hachette Book Group, Grove/Atlantic and Wisdom Publications. Two of these publishers—Grove/Atlantic and Wisdom Publications—are PGW clients, so independents hope that their interests will be represented during the bankruptcy negotiations.

And on a more personal note, I have friends who produce books which are distributed by PGW. (PGW is very discriminating, so I remember how happy they were when they finally were accepted as a PGW client.) I’m afraid to contact them to see how they are doing. I know that business was hard to begin with, and now this. Devastating.

IPA

There are these magazines born out of the zine revolution of 1990s—you know, those photocopied and stapled in garages, which also served as the main rehearsal area for punk bands. Well, these zines have grown up. I’m not really part of this world, but I’m a big fan of Giant Robot. It was actually through publisher Eric Nakamura’s blog that I learned about the fall of GR’s distributor IPA, which distributed the now glossy mag to newsstands throughout the country.

Again, this will affect independent publishers; some have announced closures already.

So are all these bankruptcies and closings coincidental? Rather than a trend, are they a correction of bad, illegal, or perhaps unimaginative business practices? Or is it something more?

In this publishing game, it’s all about distribution. How to get your product, whether it be books or magazines, out to its readers. I won’t go all red, white, and blue on you and talk about the need for a variety of voices in a democracy. But it is particularly disturbing that in the case of AMS, fraud definitely played a role in compromising the integrity of a company that was responsible for distribution of so many independent publishers. And who knows—with large publishers owed so much (Random House, $43.3 million; Simon & Schuster, $26.5 million; Penguin Putnam, $24.6 million; the list goes on)—is it only a matter of time before midlist authors at these houses take some kind of hit?

In terms of book selling, there are glimmers of hope, daffodils in the snow. Books Inc. has taken over A Clean Well-Lighted Place and one of the co-owners of (ACWLP) has already started a new venture, Bookshop West Portal in San Francisco. A Sister in Crime, Julie Ann Swayze has launched an independent bookstore, Metropolis Bookstore, in the middle of downtown Los Angeles to great fanfare, with expansive writeups in Publishers Weekly and the Los Angeles Times. And independent bookstore proponent and author Keith Raffel happily reports that his beloved store, Bob and Bob, has secured a new location.

Producing, distributing, and selling books are a tedious and expensive business. For most, especially the independents, it’s a labor of love. To see some players treat it with such disrespect is disappointing, to say the least.

To keep up to date with the AMS bankruptcy and the unfortunate repercussions felt by PGW as well as publishers, both large and small, check out www.galleycat.com, www.pw.com, and Radio Free PGW (http://radiofreepgw.blogspot.com/index.html) Also, the online archives of the San Diego Union-Tribune (www.signsonsandiego.com). (AMS is headquartered in San Diego.)

24 thoughts on “Independents Falling: Correction or Foreshadowing?

  1. Iden Ford

    Hi Naomi, it really is too bad. The US market is the largest in the world as far as I can tell. The advent of Walmart and Costco have affected the retail business as they look for products that they can purchase at a very low price and pass along the discount to their customers. The Walmart mentality has hit the bookselling market. Bestsellers and books, chosen by the retailer, are pumped out at 30-50% discounts. Volume sales are needed for profit.In Canada 6 publlishers got together recently with our big chain, Chapters, to invest money into displaying books in their stores written by Canadian authors. The books chosen will be advertised both on the web and in the adverts the chain runs in the major newspapers. Good idea you might think. The clinker is that the chain decides which Canadian authors they will display and advertise from a list of authors that the six publishers submit. The publishers have no say in the matter, they can only submit a list of names. Hence, the chain, Chapters, controls who gets the extra push and who does not.It is a sad day for Canadian publishing when you have to kow tow to the big chain. But I suspect this is the same in the US.Much harder for mid list or newer authors to get and stay in print.With the demise of the smaller independents, this does not bode well for the variety of books we will get to read in the future.

    Reply
  2. Guyot

    FORGET ALL THIS INDUSTRY TALK:

    NAOMI IS NOMINATED FOR AN EDGAR!!!!

    I declare this thread the:

    OFFICIAL NAOMI HIRAHARA EDGAR NOMINATION CONGRATULATIONS THREAD!

    Reply
  3. Naomi

    Thank you, B.G., for being the first to inform me about the Edgars! I was reading my Murderati comments before getting to my e-mail or any other website.

    The reason why I wanted to write about AMS is that we all know that big-box retailer sales play such a prominent role now in bestsellerdom. And now, with this scandal, that balloon is popped, or at least a little deflated (perception wise). No doubt sales will continue to grow in this market.

    Although my mystery series is published by a big New York house (and I’m so thankful for that–Mas’s story can easily reach all parts of the nation), I still have very strong feelings for the small press. These folks have the heart and commitment to get their message out.

    Okay, I’m off my soap box. I’m ready to party. I’ve had a massive headache since 3 o’clock, so I’m going to down a couple of Tylenol and get ready for what today brings. Oh, my phone is ringing now. . . .

    Reply
  4. Naomi

    p.s. I just finally looked at the Edgar list. What an eclectic group of nominees! Congrats to all who were nominated. I guess this means I must plan a trip to Gotham.

    Reply
  5. Pari Noskin Taichert

    NAOMI!

    I won’t email you privately because I suspect that inbox is going to be overflowing.

    This is just wonderful news! Congrats on the Edgar nom. What a heady feeling. Oh, sorry. I hope your headache goes away soon.

    And, thank you for the post about AMS and PGW — the subject is crucial and one that many of us hitherto knew nothing about.

    Reply
  6. Naomi

    In my head-pounding state, I misread that you were going to lend me a dress, guyot!

    BTW, your mask has also been removed. I doubt Walter Mosley (one of my literary heroes) would call me either “young” or a “lady.” 🙂

    Reply
  7. Louiseure

    To hell with the topic at hand. It is indeed the OFFICIAL NAOMI HIRAHARA EDGAR NOMINATION CONGRATULATIONS THREAD!

    I’m grinning ear to ear for you today, my dear.

    Reply
  8. Naomi

    “Guyot is buying.”

    I’m all for that!

    BTW, thanks for all the congrats, everyone. It’s like flowers falling all around me. I can even smell them. And yes, it’s a sweet smell.

    Reply
  9. Mia King

    Naomi, congrats on the Edgar nomination, that is SO awesome!

    God, the news of the fall of indies is so depressing. A former SF resident, I was so sad to hear about ACWLP last year. And the list keeps growing. Maybe something good will come from this … somehow!

    I’m rooting for you on the Edgar!

    Reply

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