1. There are still hotel rooms available. This is a bad sign. What this suggests is that attendance from out of NYC will be down. THIS suggests that any attendance figures the show touts will be highly packed with ‘locals’ as NYC has the bulk of the staff for the industry.

2. Speaking of packed numbers… again, we have ‘over 1500 exhibitors’. This is amazing. Though, I have done a fairly serious, one by one read of the exhibitor list and have discovered a MARKED increase in the number of foreign publishers, this year Russian, and a number of Far East printers, primarily Chinese. Remove all the foreign publishers and printers… and my gut feel is the number would fall to 1100-1200 at best, 1000 at worst.

Who can afford to set up a booth these days as a small or medium sized publisher? In addition to the costs set out in #3 below, there are shipping, booth, staff, lost work, and materials design costs, plus any freebies you are giving away.  I did the math last year to show the insanity of taking a booth. I won’t repeat it this year… but it is just as insane.

3. Please explain to me how a bookstore owner, who is supposed to be the target customer for the booth buyers at this show, can afford to attend these days? Airfare, 3 nights hotel, meals, attendance, and miscelleny have to come to almost $1,000. That suggests bookstores are doing much better than they claim, which isn’t likely. The numbers don’t support the assertion. 

4. The truly big name authors seem to me to be absent. I know that is purely subjective as one person’s big name is another’s ‘who?’. But, my feel is that a few of the big publishers are not taking space, and thus, aren’t donating their authors. Let me know if I am wrong about that and if the ‘list’ really is packed with superstars I just am not aware of.

5. If I remember long ago correctly, and that is questionable, since I can hardly remember yesterday very well any more… next year, 2012, is the last edition of guaranteed BEA shows in NYC. Aha, a brief review of the BEA site shows that the commitment is to NYC through 2015. I just hope noone has signed a contract… I would put the odds of a BEA show in 2015 at 50/50. In 2020… at maybe 1 in 4.

And, it has been moved now to even warmer weather in June. Great move! It wasn’t hot enough in past years when the air didn’t or stopped working… now it will actually kill people in June. 

Though, the idea of keeping the show in NYC, as opposed to the genius of moving it around to some of the hottest publishing spots in the country, including Las Vegas and Los Angeles (for which I hope someone was fired)… makes sense. At these prices, might as well leave this as a local show for locals to get together and toast their success (or survival).

Count on a lengthy report, as I always do, after the show, and after I have had some time to cogitate on the experience and its impact.

A combination of the recession, the economy, budget cuts, and the new way that people are getting their ‘reading material’ is turning the library into a dinosaur. I suggested what a ‘new’ library might look like, but this article will describe it almost as well. Give it a read, and as they say in poker, read em and weep… the library as we all knew and loved it, is going, going, gone…

http://today.msnbc.msn.com/id/42339223/ns/today-books/from/toolbar

While the world thinks it is reading on Kindles, iPads, and various other computers… and we all know that isn’t reading, it is just “viewing” text… the publishing industry is following the digital craze as rapidly as it can. Of course, the idea is to remain in business and profitable…

This is informational… not to be construed or imbued with emotion. The book as we all know it, may well go the way of other antiques, but like them, collecting may help to save them.

We all know what has to be done to save the industry and yet, I still see far more purchase of hard copy than eBook… I read the stats and say that a $30 hard copy of a novel is one thing… a $30 informational handbook is something else. For pure information, people want paper. For saving money for fun reading, they seem to want digital data.

This is a huge topic and one of the most serious if not the most serious in our business… so my breezy treatment is intended just to get you thinking and reading the linked article. I will have much more to say about this in the very near future… But my clain remains the same…avoid this opportunity much longer and you will be out of business sooner than you think.

http://today.msnbc.msn.com/id/42382278/ns/today-today_tech/from/toolbar

Well… for those who were ‘caught’, and I can hardly imagine anyone who wasn’t aware, as far back as two years ago, of Border’s situation, then they are out of luck.

If you currently have inventory on hand with them… I would do everything in my power to get it back… somehow. Determine how much you might lose to offer to cancel any outstanding bill in exchange for the unsold inventory (of course, first computing which is worth more). Otherwise, it is likely that your inventory will be sold and you will get little or nothing as an unsecured creditor.

Reading the general reporting of the filing, it looks like the liability over asset number is about 10MM. That said, many assets are not liquid… thus the real number might be 30-40MM. That means that 30-40MM of inventory vendors will not get paid when the whole thing wrings out. Add in atorneys and accountants… and the number could be 50-60MM. Not exactly a good position for unsecured vendors.

Do you sell to them in the future? Depends on the width of your masochistic streak.

GE is providing 500MM+… but again, book vendors are the plankton of the ocean/business food chain. As the old saw goes… fool me once, shame on you; fool me twice, shame on me.

Prepaid only. Returns at your option since you are already holding the money.

Prospects? I would prefer not to put my personal opinion in writing at this moment, since my mother always said if you don’t have something nice to say about someone, keep quiet. But, as WSJ and other analysts are indicating, Borders is low person on the book totem pole as to technology, innovation, and locations. They will dump 200+ locations, which is a start, but it still doesn’t seem, to me at this moment, there is any ‘velcro’ to make their brand stick to the consumer any better than B & N. And, until they can go toe to toe with B & N, it is likely they will just barely survive hand to mouth. Again, nowhere you as a vendor want to be.

Watch for B & N to be next… maybe not quite like this, but the ‘for sale’ sign has been out for quite a while already… and remember, you as a publisher need to be looking at ways to reach your end user/customer without having the interface of bookstores. Once you can figure that out, none of this will matter any more.

Covering discussions and potentials about allowing states to declare bankruptcy and avoiding the huge retirement, contractual, and debt bases they have created.

How does this impact YOU?

Well, if you are like my publishing companies have been in the past or my current clients, you have A/R outstanding to schools, libraries, hospitals, government agencies, maybe some government funded NGOs and programs, and any number of other potential organizations who, if a state would declare bankruptcy, would also likely have to close their doors and reneg on their bills as well.

The waterfall or ‘trickle down’ (to use a Reagan term) on this kind of disaster would be so enormous that thousands of business vendors would be a risk for such an event in even one state… let alone that I have heard whispers that as many as 14 states are sufficiently in trouble to use this vehicle if they could.

What to do? In simple terms…

Establish a threshold… i.e. $1000 in A/R.

Establish a new credit procedure… Anyone over that amount has to clear a new credit procedure that asks where the budget funds come from both for the organization AND for the specific purchases made from your company. You also have to ask how much funding comes from the state or agencies of the state.

Shorten the leash I… less credit for those who appear to be dependent on state funds; go from unlimited to 5,000 or from 5,000 to 3,000 until the crisis appears to be over…

Shorten the leash II… and more diligence in collections from those as well. 90 days is old school. Starting following up at 25 days and every ten days until the bill is paid. Establish a new credit policy that further orders will be delayed if there is an outstanding invoice over 55 days.

Offer incentives… a 5% discount for 10 day payment; free shipping with a prepaid order, and no, don’t tell me these kind of customers don’t prepay because they do when offered enough of an incentive… even 5% PLUS free shipping if you have to… 90% of an invoice in hand prepaid is very equal if not much better than 100% of an invoice with a 90 day delay and a 2% risk of non payment altogether.

Encumbered funds… whenever possible, identify invoices that are tied to encumbered funds of the customer. These are monies that have already been collected, such a real estate taxes for school districts, that are then earmarked for specific purchases or classes of purchases. Once the funds are set aside (encumbered) is it very difficult to use them for anything else. Thus, encumbered funds purchase orders are generally good as gold and unfazed by bankruptcy.

That’s the ‘short list’ of self protection. Shame on you if you don’t do AT LEAST this much to protect yourself and your business.

Well, the good folks at IRS are reminding you, by certified letter if necessary, that if you were one fo the lucky ones who took advantage of this credit in 2008… not 2009 or 2010, only 2008… you have won the right to start paying the credit back this year. You’ll pay the credit back divided over 15 years… thus $7,500 divided over 15 years is $5oo a year you owe Uncle Sam… starting now.

Wait! You say… the people who got the same credit in 2009 and 2010 don’t have to pay anything back. Correct! You were one of the lucky ones! Tax law changes every year, and often to fit political ends, not economic or tax ends. So, in 2008 the law was written one way… and then changed in 2009. Just that simple.

So, just a heads up if you were one of the lucky ones… you’ll be hearing from the IRS shortly.

http://technolog.msnbc.msn.com/_news/2011/01/28/5940731-kindle-books-now-outsell-paperbacks/from/toolbar

If you still aren’t into eBooks and in a big way by now, meaning every other book in your line has an eBook not every one, every other one, as I said)… then email me mfoner@nplconsult.com for one of two reasons:

     1. To list your company for sale and go off and retire before you get tossed off the radar and the map.

     2. To get started in eBooks, digital products, and alternate revenue streams.

I am not positive yet that my 2007 prediction that 50% of all book sales would be digital by 2015, but at this rate, it looks like I will hit my target by then, if not sooner. If I were a betting man, I might take 2013 as my year excepting technical, academic, and coffee table titles, all still pretty much print products.

So, you have roughly two years to be deep (50%) into digital or out of the picture.

No Borders stores… maybe a Borders.com for some small online sales.

Barnes & Noble reduced from its current size to maybe… maybe a hundred stores in the most prime revenue locations… and a b&n.com wesbite doing some online sales… and its Nook doing a small but steady eBook business.

Thus, this part of the retail business you, as a publisher, might be used to, reduced by 33%, maybe 50%… as much as 75%?

Possible?  Very.  Likely?  If things keep going as they have been, it is apparent that Borders’ attempt to acquire B & N will go nowhere. And a corresponding buyout by B & N of Borders, would accomplish even less for B & N… mostly competitive stores to close down… no eBook platform to speak of… B & N acquires virtually, and really, very little… except eliminating a competitor.

Now that, in and of itself, IS a big deal. There isn’t enough space in the marketplace for more than one retailer in this niche. And, in my humble but futuristic opinion, there may not even be room for one… which is why I see B & N, assuming it survives, as an almost specialty retailer, selecting its best hundred profitable locations and continuing on from there… using its Nook platform and any currently negotiated deals as a basis for holding on to some eBook business.

Ok then, what about the independent bookseller or small but well known local/regional chains? (Just as an aside to the main discussion…) Well, I predicted that by 2012 the ABA would be reduced to well under 1,000 members, and shrinking. I am also predicting that the local bookseller, unless she is doing a coffee shop, or specializes in amazing customer service, or some specific niche (every last title on the Civil War with a store in Gettysburg, or used romance novels at the beach), is likely also dead in the water. Now, before I get all kinds of hate mail… yes, there will still be plenty of the independent bookstores around… simply because some people just love books, and are NOT motivated by earning a profit. So, yes, there will still be some of those in business, but anyone who HAS to earn a profit… will have to become extremely creative or perish.

Ok, back to the Borders/B & N situation.

Let’s assume that you do a decent ‘retail’ business. You like your Amazon orders, you like doing online with a number of smaller retailers, and you are happy to have your business with Borders/B & N either through a distributor or directly. Let’s assume that the B/B & N biz is 50% of your retail business which is 50% of your total revenues. (Let’s HOPE that ISN’T the case, but for many smaller publishers, unfortunately, it might well be at the moment.) Thus, a reduction of 50% of B/B & N revenues means a revenue loss of 12.5% of gross numbers. A 75% loss would mean a revenue loss of almost 19% of gross numbers. Can you handle a 12-19% reduction of your revenues?

Something to seriously think about.  So what IS the landscape for most small and medium sized publishers after the B / B & N shrinkage?

Very much what I have been preaching forever.

Make sure you have covered your niche well. Know your end user customer. Find them and promote to them. Take your ‘trade’ discounts and offer them to your end users. Promote constantly and incessantly. Grow your mailing list. Market, sell, develop, and repeat as often as possible. Get better on the expense side of the ledger… lean and mean.

And when doing new titles, allow the market to drive decisions instead of publish and pray. That is, listen to your customers… ask them what they need, what they would purchase… and then go out and create it, instead of deciding what to publish and then hoping your customers will buy it. ‘Pull’ marketing is 100% easier than ‘push’ marketing. Find multiple ‘special sales’ venues. Find multiple ‘formats’ in which to sell your information.

I am sure I have left at least ten ‘new paradign’ homilies out of this discussion… but I think I have covered the primary ones.

Don’t leave yourself and your company exposed to this kind of risk, from any source or direction. Twenty different revenue streams means that cutting off three, is a loss, yes, but being able to add two more means your net loss is 5%. While noone likes to lose 5% of anything, it is much easier to take than 12% or 19%.

Prepare yourself to survive and thrive, not to become a victim of the upheaval in publishing. The landscape out there doesn’t look good, but you can make it as pretty as a Provencal van Gogh nightscape, if you focus and achieve.

Yes, folks… for only the second (maybe third, who’s counting?) time around, WSJ reports Borders is not meeting its vendor payment schedule… Hachette being one major player they referred to as being left unpaid at this time. Of course, the big concern in the article is how do they get new inventory?

We, in the industry, of course have been aware of Borders’ issues for quite some time and forward thinking people like Jed Lyons over at NBN advised his publisher clients a year (maybe two) ago to either accept the risk directly for unpaid A/R or they would no longer sell to Borders until their balance sheet actually had some balance on the sheet.

Caveat: I have no inside, outside or even cursory knowledge of Borders finances and haven’t read their current financials. Don’t need to… when you stop paying vendors for the second or third time, vendors start to get the message. If Borders is to continue, bankruptcy protection seems like a logical place to start. EVEN THEN… I would only plan to sell on a COD/Prepaid basis if selling directly and I would instruct any distributor for whom I might be on the hook for the A/R NOT to sell to them at all for the moment.

If that sounds harsh, then give me $5,000 and I’ll go to Provence… at least for your $5,000 loss, you’ll get postcards, fine wine shipped to you, some pate and perfume, and thanked for months to come in my newsletters… with Borders all you will get is grief and loss of inventory.

Enough said. Conduct yourself accordingly.

The big answer is, raise taxes on just about everyone, and they WILL remember. Ask George Bush Sr… and if you don’t remember… Read my lips… no new taxes. Cost him a re-election. And while Americans have a long memory when it comes to having their taxes raised, they are equally likely to forget Mr. Obama’s pre election promise to raise taxes on the rich, in exchange for not having THEIR taxes increased.

And yes, make no mistake, unless your income is bupkis, and even then, your taxes would have gone up if this bill hadn’t been passed. Even the lowest bracket would have shrunk and tax increased in some cases. In the slightly higher and higher brackets, for certain the tax difference would have been felt…from a few hundred dollars to many thousands.

So, isn’t Mr. Obama crossing himself and taking a political risk? Let’s go into the archives for another political homily… It’s the economy, stupid! So, no, Mr. Obama realizes two things… unemployed people have long memories, and people who ahve to pay higher taxes have long memories. On top of which, a tax increase at this point in an extremely fragile recovery… don’t listen to the media… is virtual economic suicide. The very BEST outcome of such a move would be a double dip recession… the worst is mraginally unthinkable.

Thus, if Mr. Obama has any chance of repeating in 2012, the economy has to be running by then… one more homily… Are you better off than you were four years ago? If the electorate answers NO, Mr. Obama is out. If they answer yes, he has the necessary mandate for four more, rather interesting, years. So, his political capital is betting on the economy improving, and in that light, this is an excellent move compared to the alternatives.

And, for all of us, it IS a good thing. Lower taxes improve the recovery; they help us all put more money in our own pockets. They also reduce the level of skimming and pocketing, since there is less incentive; and generally, allow people to plan their financial futures with more certainty. All in all a good thing. For example, with this two year moratorium on tax increases, comes the realization that 2012 is an election year, so nothing will happen then. The next Congress to start will be in early 2013, so the earliest they could do any damage would be for the 2013 tax returns filed in 2014. This is 2011…

You have three years of peace and consistent tax planning to count on for your businesses and families. Use it well and grow some security for yourselves and families until then.