Bankruptcy and Publishing

With all the talk of small publishers, and possibly a few bigger publishers, filing for bankruptcy, I see a lot of misinformation traveling around the writer blogosphere. If your publisher has filed for bankruptcy, or is facing the possibility of filing, this is a time when a writer really, truly needs expert help in the form of a bankruptcy attorney.

Many contracts with American publishers have a clause in them, saying that in the event that the publisher files for, or is forced into, bankruptcy, all rights revert back to the writer. For all intents and purposes, this clause IS ABSOLUTELY MEANINGLESS!

Why? In the American legal system, contracts are governed by state law. In fact, there's usually another clause in the contract specifying which state's law is the deciding factor. (And it's almost always the publishers' home state.) Bankruptcy law is federal law. And the American system, federal law almost always trumps state law.

What does this mean? It means if your publisher files for bankruptcy, the rights he bought from you become part of the bankruptcy estate and can be sold to satisfy the publisher's debts. Not only that, but if your publisher owes you royalties, those royalties are an unsecured debt which put you the writer near the bottom of the list of people to get paid by the bankruptcy trustee. This isn't anything personal on the part of the trustee. The law ranks creditors in a certain order.

If you think your publisher is in trouble (such as the poor folks who sold rights to Ellora's Cave), you need to talk to an attorney who specializes in bankruptcy NOW. If you wait, you may never see your precious books again.

How Much Longer Can Barnes & Noble Hold Out

It's hard  to believe it's been two and a half years since Borders drowned in Chapter 11. You'd would have thought Barnes & Noble would have learned from the death of what had been their biggest rival for a couple of decades.

And in some ways B&N did. They saw what Amazon was doing to gain market share. They jumped into the device market with the introduction of the NOOK. They opened up their e-book store to indie writers. But they did nothing to alleviate the crushing overhead of brick-and-mortar stores.

Sales of paper books went down or stagnated, depending in which source you take as gospel. Even as their archrival fought to keep its head above the rising tide of debt, B&N reduced their movie selection and eliminated music entirely. They expanded that previous media space and installed a mini-toy store instead. In the front of the store, a gigantic NOOK display blocked the sight of the books. Where the NOOKs hadn't invaded, home furnishings, kitchen knick-knacks, and Vera Bradley dominated.

So why didn't these changes save B&N?

They forgot their primary mission--customer service.

Clerks would refuse to order books that the stores did not carry, or they would lose the order. The B&N website has not improved its search criteria or any other functionality in the last three years. Attempts to contact the company regarding problems are often met with a resounding silence.

The toys were not necessarily a bad idea, but pricing them 30-50% above other retailers like Target and Walmart was.

On the NOOK side, they didn't fulfill their promise of additional content for their tablets. Customers only had access to e-books and a few cheesy apps. No movies, TV, music or decent games. So customer started rooting their tablets in order to use them with other vendors. B&N retaliated by locking the devices in such a way that if a customer tried to root her device, she ended up with a paper weight.

Then there's the issue with vendors. B&N got into a pissing contest with Simon and Schuster over payment of front table and end cap placement prices that lasted six months. Some indie writers are missing payments as far back as May.

Rather than take a hard look at business practices and improve them, the B&N board fired CEO William Lynch last month. CFO Michael Huseby now runs the company. I'm sorry but beancounters rarely have the vision to pull a company out of a tailspin.

Chairman Len Riggio filed with the Securities and Exchange Commission that he planned to buy out B&N's shares of the retail stores and take the company private.

Fourth quarter losses in the NOOK division prompted the company to state last month that it was withdrawing from the tablet market. They've been mum about whether the e-book section will follow NOOK or stay with the bookstore division should they find a buyer for the NOOK. And frankly, no other tech company wants to touch NOOK with the proverbial 10-ft. pole.

A couple weeks after the fourth quarter announcement, losses went even higher due to extra taxes on an accounting "mistake."

In August, management reversed the policy changes stated in July. NOOK devices will still be manufactured. Riggio has withdrawn his offer for the retail stores.

And in the midst of the chaos, bugs in Nook Press, the upload interface that replaced PubIt in July, has caused a wealth of suspicion in the indie writer community. Sales appear and disappear. Real-time updates have been a joke. Writers are concerned they are seeing the same types of fuzzy accounting that trad publishers are notorious for. Many are biting their nails, waiting to see if August payments hit their bank accounts.

Can B&N get their shit together?

Not at the rate they are going. The big question? How long can their bloated plane glide before it crashes.

RIP Borders

Currently reading - Dead Girls Are Easy by Terri Garey

Today begins Borders' Going-Out-Of-Business Sale.

The reader in me says, "Yahoo! Books on sale!"

The writer in me says, "Well, shit.  There goes more shelf space into the ether for all of us."

The former BGI employee in me knew this day was coming seven years ago, just shakes her head sadly and keeps her fingers crossed that the employees can find something else soon in this freaking' economy.

There're others who've analyzed the Borders'demise to death.

I can add very little, except to honestly say, "They're all right and all wrong at the same time."  Everybody in this publishing business has started turning on each other.  It's been ugly.  It'll get uglier.  Few will come out unscathed.

All we can hope for is to survive the blood bath and become better writers, and business people, in the new world order.