NEW HARPER COLLINS UNIT TO TRY TO CUT WRITERS ADVANCES

From the New York Times vernight.

HarperCollins Publishers is forming a new publishing group that will substitute profit-sharing with authors for cash advances and will try to eliminate the costly practice of allowing booksellers to return unsold copies.

In a move that surprised many industry insiders, HarperCollins announced on Thursday that Robert S. Miller, the founding publisher of Hyperion, the adult books division of the Walt Disney Company, would leave his post of 17 years to lead this new, as yet unnamed entity.

The new unit is HarperCollins’s effort to address what its executives see as some of the more vexing issues of the book industry. “The idea is, ‘Let’s take all the things that we think are wrong with this business and try to change them,’ ” said Mr. Miller, 51. “It really seemed to require a start-up from scratch because it will be very experimental.”

The new group will also release electronic books and digital audio editions of all its titles, said Jane Friedman, president and chief executive of HarperCollins, a unit of the News Corporation.
“At this moment of real volatility in the book business, when we are all recognizing things that are difficult to contend with, like growing advances and returns and that people are reading more online, we want to give them information in any format that they want.”

The new group is entering a difficult market for books generally. Citing economic uncertainty, the Borders Group announced last month that it was considering selling itself. Barnes & Noble also said it expected first-quarter results to be slightly down from the previous year.
Author advances and bookseller returns have long troubled the publishing industry. Best-selling authors can command advances so high that publishers often come away with slim profits, even for books that are significant successes. Publishers also sometimes offer high advances to untested authors in the hopes of creating new hits, but often those gambles do not pan out.
Ms. Friedman said the new group, which will initially publish just 25 titles a year, would offer “low or no advances.” Mr. Miller, who was most recently president of Hyperion, said he hoped to offer authors a 50-50 split of profits. Typically, authors earn royalties of 15 percent of profits after they have paid off their advances. Many authors never earn royalties.

Jennifer Rudolph Walsh, a literary agent, said: “I’m not cynical about it, and I’m open to ideas, but I think it’s too soon to say what the validity of it is. These words seem fine and interesting, but how does it benefit the author and how do we find our readers?”
Under standard practices, booksellers can return unsold books, saddling publishers with the high costs of shipping and pulping copies. Mr. Miller said the publishers could share with authors any savings from eliminating returns. A spokeswoman for Barnes & Noble declined to comment on HarperCollins’ plans.
Robert P. Gruen, executive vice president for merchandising and marketing at the Borders Group, said that it was premature to comment specifically on the new business, but he said, “We generally support the idea of looking at potential solutions to a return system that is not working well for the industry as a whole.”

The new group, which Ms. Friedman is calling a studio, will most likely publish hardcover editions priced at the low end of the market, around $20 a copy. She pointed to some of the titles that Mr. Miller had published while at Hyperion as models, including “The Five People You Meet in Heaven” by Mitch Albom and “The Best-Loved Poems of Jacqueline Kennedy Onassis.”
Mr. Miller’s exit from Hyperion follows the departure in January of Will Schwalbe, editor in chief, to pursue an unspecified Internet-related project. Ellen Archer, publisher of Hyperion, will take over as president from Mr. Miller.

Also on Thursday, Weinstein Books announced that Rob Weisbach left his post as president and chief executive to pursue other publishing opportunities.
At HarperCollins, Mr. Miller said he was considering offering both e-book and audio editions of the hardcovers at no extra cost to the consumer.

AND FROM PUBLISHERS LUNCH ON THE SAME SUBJECT

More On Miller

Bob Miller's new experimental start-up with HarperCollins took shape quickly after a casual discussion over drinks with Harper ceo Jane Friedman at the end of February. Miller says that he was "feeling restless and didn't know what next mountain to climb" and was "talking about my frustration with the paradigms in this business." He explained to Friedman how we would theoretically "do it all over again" and she encouraged him to put that plan into action. "I realized this was my time," Miller says.On some of the specific intentions of the new line, a 50/50 profit share with authors (and minimal advances) is a central tenet. But the idea of selling everything on a non-returnable basis was overstated in a WSJ report.

Miller says "I definitely want to sell non-returnable if possible" particularly since that maximizes the profits to be shared and "the goal is to try and stop wasting money on things that don't actually help sell books." But he recognizes that conversations with retailers are an essential element of such a plan and that the process may "evolve after we start."

As Miller notes, publishing today is "a race for margin" and "the current model is pretty broken," adding that "it's too tempting not to try" to improve on that paradigm.If you intuited that the statement in the press release expressing the intention of "taking full advantage of the internet for sales, marketing and distribution" signals a desire for more direct selling online, then you were correct. "Definitely one of the things we want to experiment with is direct selling to consumers," Miller told us, along with working in partnership with a variety of internet booksellers and other entities. He also hopes to "experiment with selling other formats" so that, for example, "people get the e-book and the audiobook with their purchase" of a print book.

Miller sees his "studio"--called that so as "to not be trapped by the definitions that already exist for publishing companies we know"--as comprising a "handful" of dedicated staff focused on "mostly nonfiction" titles. While recognizing that "an established author who is already making more than the publisher probably wouldn't be interested" in the joint profit-sharing model, he adds that "I'd love it if established authors want to try off-the-beaten track" projects and experiments with the new venture.

He says that "short low-price hardcovers" are "where I think the market is, and where I've had repeated success," ranging from short books by David Halberstam and Steve Martin to FISH and the Mitch Albom titles. Which also allows for the wide-ranging experimentation to include books that are longer than magazine articles but shorter than conventional book titles.