Moonrat at Editorial Ass(istant… get it?) has a brilliant post up about return rates. He is so insightful about publishing that I’ll forgive him the occasional language slip up.

He was asked if it was true that on average, 40% of the books that are printed by the publishing industry are destroyed because they didn’t sell. The best part of the post:

Publishing companies like to put out huge quantities of a book because they get paid by the vendors right away. The vendors send them cash for all the books they buy. Alas, remember, book publishing is a returnable industry–which means those vendors can (and will) in 4 months or so return all their unsold merchandise–which might be up to 100% of what they originally bought. And the publishing company will owe them the dollar value of every book they have to take back.

But hey! They solve that cash flow problem by paying back their debt with money they make from overselling NEXT month’s title. The hope is somewhere along the way, a book will actually sell THROUGH to customers, thus helping us overcome our own stupid cash flow cycle.

I’ve watched the return cycle at a very small publisher. I know that the books that come back are not at all necessarily in a sellable state. Nevertheless, the bookstore gets their money back and the publisher eats the cost.

It’s when I remember details like these that I get more excited about digital distribution and the future of the publishing industry in terms of short runs, etc. I don’t know how it will work, but I do know that the present model is in some ways broken. Beautiful, but broken.

After all, can you imagine if Starbucks had to give you back your money after you sat holding your cup for four hours, perhaps even taking a sip? Yeah… wouldn’t work for them, why should it work for anyone else?