Book Distribution In America: A Legacy of Corruption With Incalculable Costs

In my last post I mentioned the Publisher’s Group West bankruptcy issue and linked to the New York Times article about it, the Mediabistro post that provided a little explanation, and the snarky parody site, Radio Free PGW. Then I had a long talk with my publisher on the phone, and realized how serious this all is. For anyone who writes, publishes and reads books. Bottom line: get ready to say goodbye to many indy/small book publishers.

The New York Times article quoted an “anonymous” (um, yeah) publishing executive, stating that “authors and readers were unlikely to be affected by the bankruptcy filing”. Nothing could be further from the truth.

Let me explain, with what I’ve learned tonight. Publishers Group West is the largest book sales and distribution company in the US — it is the distributor that my publisher, Cleis Press, uses and PGW doesn’t just do indies but also their parent company AMS distributes biggies like Random House. Here’s their active list of publishers. PGW was founded as company on their own, and then in 2002 became part of a behemoth book distribution company called Advanced Marketing Services. AMS filed for bankruptcy, and as of December 29, 2006, all assets were frozen and are now held. So even though book sales were terrific last year and PGW (and all the publishers they distribute) had a great year, the book publishers’ money now belongs to the court.

The money, exactly, is from sales months September though December — the most profitable book sales months of the year. This is calculated as roughly a third of most publishers’ yearly income. For those months, publishers like Random House are now out to the tune of $43 million. Imagine what’s going on at all the small book publishers, where $20K is like a million dollars to them. Off the cuff legal advice tonight told me that it may be possible that some publishers *might* see about 70% of those funds by the end of the year, but that it will likely take longer, and making it to that point will be the question. I have now received emails on this topic from friends who run publishing companies who have laid off their entire staff. Happy New Year. Say goodbye to small publishers. Only the big boys are going to make it.

The effect this is about to have on the book culture is gruesome. Many small publishers live month to month as it is, and many bank on the holiday season to make it through the rest of the year. Small and indy publishers are valuable for culture and speech, essential in the face of corporate information distribution and represent the foundations of diversity within communications media. When they start dropping out, you better bet readers will feel it, and notice. Imagine a Good Vibrations with only books from Harper Collins in it, or a world without Cleis Press.

And us authors — well those of us who have chosen the path of indy publishing because it’s something we believe in and (most importantly) can say what we want to, even if the money is small change — we’re fucked. I get royalty payments, as do others: it’s the same calculations, none of us are getting the money from our book sales for the last four months. I pay rent month to month; I have just lost a third of my income, and hope that my publisher will recover. I’m out at least four months of rent, boom. Right now I’m not sure what I’m going to do.

Just what did AMS do to screw everyone over so royally? I’m not sure, but they are a dirty, dirty company. NYT tells us that AMS has “been looking for additional financing or a buyer for the last 18 months”, but in the beginning of December 2006 former AMS vice president of advertising Sandra Miller Christie was sentenced to 3 years in prison for her role in falsifying earnings, a scheme that occurred from 1999-2003. A closer look at AMS and it’s like Enron in there. Two other former AMS employees were sentenced earlier in 2006: Marcy Wilson Roke, the company’s former marketing director, was sentenced in June to five years’ probation, with 12 months to be served in a halfway house; Karyn Ann Larko, the company’s former director of advertising for customer accounts, got five years’ probation and a $2,500 fine. The SEC has been investigating AMS for a while: this litigation release from 2005 states that the investigation (beyond Christie) was continuing.

What the fuck is up with these greedy old ladies? More importantly, what is going to happen to the rest of us? The court has granted PGW permission to resume business, so book sales will continue for all publishers — at least, those who can stay afloat with a huge hole punched in their earnings, cashflow and ability to pay debts. What small publishers need now is survival cashflow for the next few months. So if you want to buy a book, buy it directly from the publisher whenever possible. Cleis Press and I are moving forward on all of our book projects and they feel confident that they can survive. But if you’ve ever loved a Cleis book, have ever wanted one, or appreciate what contribution this indy press has made on the world — from queer culture to sex-ed books to erotica — buy a book from their website this month. Or three — not surprisingly, Cleis is now having a sale, buy three get one free, with free shipping.

And what am I going to do?

I told myself I wouldn’t think about it until this blog post was finished.

Update: Felice Newman offers a minor correction, saying “One little correction: PGW doesn’t distribute Random House. AMS is a wholesaler of books from Random House, and all the other large publishers.”

Also, there is now a sizable collection of links to a variety of blogs on this topic over at Edward Champion’s blog. Includes this great quote from Paul Collins: “Innumerable small publishers working with AMS and their subsidiary PGW — just about every good small publisher you’ve ever heard of — woke up in the street on New Year’s morning with their clothes missing and a pair of black eyes.”

Update 1.8.07: Galleycat now has this post with a link to my post (and a quote, thank you), and adds a bit more info about the hyooge conference call PGW publishers had last friday (right before my call with Cleis), and notes that yes, everyone’s in dire straits, all the way to the UK.

Also: Boing Boing posted a link to my post (and quoted, thank you), this a new link and comment about AMS’ monopoly.

Update, reader comment 1.8.07: Adam Parfrey, publisher, Feral House / Process Media emails saying,

“The AMS/PGW bankruptcy will hurt those publishers the most who will
have trouble tiding themselves over without receiving due revenue for
at least a few months. Perhaps things will right themselves with PGW
after the bankruptcy paperwork is settled, but this is what I
understand to be the case. I’m not sure that the 70% repayment after
a year is true, either, since PGW is a separate operation from AMS,
and this book company would fail utterly if the company did not
continue to send out books and publishers were not paid for 12
months. There are people I know that are trying to right this ship,
like Charlie Winton, the same man who sold the company to AMS.

Feral House moved from PGW to Consortium distribution about a year
ago. It’s not an easy thing to move your distribution. PGW still has
thousands of our books in their warehouse, and now we can’t get our
hands on them until this bankruptcy thing is sorted out.

There were at least several big reasons for Feral House’s move, and
one of the biggest reasons was this: I met the AMS execs, and felt
that these people could not, would not understand or appreciate the
kind of books I publish. Got a bad feeling from them. They seemed
like 40 year old Bush-loving frat boys. This in contrast to the old
Charlie Winton, a post-hippie hipster of sorts. Then when I heard of
the SEC investigation of AMS, that was the convincer. Get the hell
out of there. I’m glad I did, no matter the difficulties of moving
your operation.”

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