Selling Nonreturnable

This could be big. From today's Wall Street Journal:

Borders Group Inc. has agreed to accept books from HarperStudio on a nonreturnable basis, departing from a decades-old publishing tradition.

Under the terms of the deal, the nation's second-largest bookstore chain by revenue will get a deeper discount on initial orders of books published by the new imprint of News Corp.'s HarperCollins Publishers--58% to 63% off the cover price.

Bob Miller, head of the HarperStudio imprint, was aiming to find such a deal back when he started.

It would be a huge change for the American book industry if frontlist titles are sold to retailers on nonreturnable terms. The "value publishing" wings of some companies already follow that model, but their books are often reprints or novelty packages that are designed not to need publicity.

HarperStudio's initiative is a limited experiment. It's a new, small (in output) imprint of the big, old HarperCollins company, with a mandate to try new ways to publish. Borders is struggling, and may have nothing to lose.

But if this works, we could see some rationalization in how books are sold. Since the Depression, retailers have been able to return unsold inventory for full credit. That makes it easier to convince stores to try out unknown authors or risky subjects, but it also means publishers never know how many copies of a book they've really sold, and thus how much money they'll have to pay the bills.

Under the new arrangement (which is really a century old), Borders will be responsible for discounting or otherwise disposing of its unsold inventory of HarperStudio books, in exchange for being able to keep more of their cover price. Instead of sending copies back, it would discount them.

Which brings us to another way that the book industry tries to play by rules that no other field of business follows. How many other products come with permanent price tags? In other businesses, producers and retailers have more flexibility to price according to demand. Will that be where HarperStudio experiments next?