My former book store distributor went bankrupt
Posted by John Reed on
Advanced Marketing Systems, Inc.
On December 29, 2006, Advanced Marketing Services, Inc. declared Chapter 11 bankruptcy. One of their subsidiaries is Publisher Group West of Emeryville, CA which distributed my books to book stores from 1981 through 2001. The San Francisco Chronicle story also said that PGW’s bankruptcy threatens the survival of many small presses. Not mine, baby! They terminated me in 2001, apparently because I kept complaining about slow payment and other misbehaviors.
The Chronicle also reports that the FBI and SEC began investigating Advance Marketing Services in 2003 and that those investigations resulted in three of the company’s executives pleading guilty to falsifying the number of catalogs they sent out to book retailers from 2001 to 2003. Advanced promised to update its financial statements for those years. When they did not by the end of 2006, their lender called their loans and Advanced sought bankruptcy protection. In addition to lost revenue from recent and future sales by PGW of their books, the publishers generally have almost all of their inventory currently sitting in PGW’s bankrupt warehouse in Indiana.
Should have listened
If my follow publishers had listened to my warnings in my book on self-publishing, which came out in 2005, they likely would not have suffered this fate. I did not know PGW was going to go bankrupt, only that they were not paying me on time in the later years and that they were treating me badly otherwise.
Readers of my book How to Write, Publish, and Sell Your Own How-To Books read all the sordid details about PGW’s behavior including:
- their regular announcements that our net would be going down while theirs went up
- my not getting checks from them when they were due
- my inability to get them to return to me books of mine that were on consignment in their warehouse
- their failure to return my books to me until after they were obsolete and therefore no longer salable
- the damaged condition in which they retuned my books in spite of their deducting a full refund for such books from my checks
I also told in my book how, after they terminated me effective 7/31/01, they kept right on selling my books then refused to pay me for them until August of the following year!
I sued them
I got fed up and sued them for conversion acting as my own attorney. Had they paid me the normal percentage of the sales, or about $9,000, on time—or at least what passed for “on-time” at PGW, that is, about 110 days after the sales of my books—I would not have sued. But telling me they were going to wait a year outraged me so I sued.
They got it forced into arbitration. Apparently as a result of the arbitrator giving a preliminary indication that he saw no merit to their position, they immediately offered to settle. I agreed and ended up receiving over $24,000 for the books that I would have accepted about $9,000 for had they paid “on time.” Dumb jerks!
In the early years, PGW were good people. But as the trade book business turned into an oligopoly, they turned into bad guys. I complained more and more each year until they terminated me in 2001.
The first calendar year after they stopped distributing me to book stores, my net income went up 257% over what it had been the last full calendar year that they distributed me.
In retrospect, I wish I had terminated them at least a year or two earlier.
In the Internet era, they are obsolete for how-to and reference books. With the possible exception of best-selling authors, any how-to or reference-book author who sells through book stores needs his head examined. I would lose a six-figure amount off my annual income if I went back to PGW or any other distributor.
News accounts say that a company named Perseus has been authorized by the bankruptcy court to offer a new contract to the former PGW publishers. Among other things, it would reportedly give the PGW publishers 70 cents on the dollar for the money owed them by PGW. This is being hailed as a great deal. I guess everything is relative. I have never gotten less than 100 cents on the dollar. Actually, in my last transaction with PGW, I got $24,000 ÷ $9,000 = 267 cents on the dollar.
I tried to get the details on the Perseus offer, but when I click on “Perseus Transition” at the PGW web site, the link does not work. Typical. For the old PGW publishers’ sake, I hope their checks work better than their Web site.
I suspect not a single one of the PGW publishers will learn the obvious lesson and self-distribute direct to retail customers henceforth. They childishly define book publishing as being in book stores and it is costing them tens of thousands to hundreds of thousands of dollars per year per book. Authors and publishers need to choose between impressing their ignorant friends and relatives by “being in book stores” or making 257% more per year net by cutting out the middleman. Actually, when the middlemen start going bankrupt, the publishers’ net would go up even more if they cut out the middleman. And their anxiety levels would go down.
But there’s no 12-step program to help you get over addiction to the status of “being in book stores.”
Hi. I’m John and I’m a book store author.
Greek chorus: “Hi, John. Don’t worry. We’ll help you get through it.”
For more information see my article on why I do not sell through Amazon and my article on distribution and my book How to Write, Publish, and Sell Your Own How-To Books.
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