Book distributor bankruptcy means indie publishers screwed?

January 8, 2007 – 9:32 am

Violet Blue has a post up today about the Publisher’s Group West bankruptcy story, which was recently covered in the New York Times, Mediabistro, and on parody site Radio Free PGW.

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.

Link to Violet’s post.

Kathryn Cramer adds,

The national press just isn’t putting this story together properly. American Marketing Services was the only way for publishers to get books into the club stores like Costco, so nearly all publishers did business with them even though they’ve had an SEC investigation and three execs convicted of cooking the books. The FBI seems more interested than the publishers in addressing the problem. This is insane. Monopoly capitalism in action!

Link to related post on Kathryn’s blog.

Update: Here’s another post on Mediabistro about PGW: Link to “PGW publisher options, legal issues.”

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