Borders May be Putting Independent Publishers at Risk

Debtwire.com has alleged that financially troubled Borders Bookstores has been paying large publishers on time but delaying payments to smaller independent publishers.

Major publishers reported they had been paid on time, but the average time to pay independent publishers jumped to 97.9 days, up from 64.9 days a year ago, according to Debtwire.com.

Bookstores pay on an archaic system left over from The Great Depression when publishers were desperate to keep the publishing industry alive. Rather than to sell discounted books outright to bookstores like other products are sold, publishers opted for a consignment system. Bookstores typically pay only after books have had bookshelf exposure and they return unsold books to the publisher.

The system has always posed as a threat to self-publishers, including Christian publishers, who operate small boutique companies with a limited number of titles. Slow payment and returns have the potential to wipe them out financially.

In a statement, Borders challenged the Debtwire.com allegations saying, it has “continued to pay its vendors in a timely manner.”  Nevertheless, Borders is struggling to adapt changing technology, cautious consumers and strong competition from Wal-Mart and Target.  The Borders Group was unable to sell the chain earlier this year and there has been an exodus of executives from the company.

Independent publishers need to exercise caution with Borders and other bookstores in today’s volatile economy.  One major publisher was said to have terminated its return policy with Borders to reduce risk. Another publisher has stopped shipping to Borders because of fears the retailer will send large numbers of unsold books back.

Posted Jan 24, 2010

 

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