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Lakeshore
An author of no particular popularity

Jay Lake
Date: 2011-02-21 05:11
Subject: [links] Link salad dreams of presidents
Security: Public
Tags:books, culture, links, personal, publishing, science, weird
The Definitive Work on PainScrivener's Error with more well-informed analysis on the Borders bankruptcy.

[info]ferragus with a fund raiser for his beloved dog, Connery BeagleThe anthology itself.

Forgotten aquatic parakeets once amazed with their bionic gills — A weird squib from Boing Boing. (Via [info]danjite.)

The New Money — Credit card transactions and your iPhone. Fascinating stuff.

If I were an evil genius, how could I go about melting the ice caps?The Straight Dope is deeply snarky with a completely, erm, straight face.

?otD: Who's your favorite US president?



2/21/2011
Writing time yesterday: 1.25 hours (short fiction revisions, WRPA)
Body movement: 30 minute stationary bike ride
Hours slept: 7.5 hours (interrupted)
Weight: 252.8
Currently reading: Dead Iron by Devon Monk

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Kelly Green
User: saycestsay
Date: 2011-02-21 14:07 (UTC)
Subject: (no subject)
Favorite US President? Ben Franklin. He was perfect.
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cathshaffer
User: cathshaffer
Date: 2011-02-21 14:08 (UTC)
Subject: (no subject)
I've not seen any convincing argument for a legal basis for publishers to pass their losses on to authors in the event that they cannot collect the full amount of what is owed to them by a bookseller. Keep in mind that authors are not the publishers' only vendors. Is the publisher allowed to short its copyeditors, window washers, janitors, paper and ink suppliers, copy machine repairmen, and accountants in order to make itself whole? No, I don't think so. The "shenanigans" proposed in a previous SE post that describe possible ways for the publisher to avoid paying the royalties it owes all seem illegal to me, and therefore improbable. The only way that the publisher is going to be able to avoid paying its own debts is by entering bankruptcy itself. It has no vicarious protection via its debtor's bankruptcy. A chain reaction of publishers becoming bankrupt is a possibility--it's happened in recent history with banks.
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Jay Lake
User: jaylake
Date: 2011-02-21 14:21 (UTC)
Subject: (no subject)
I don't think the issue is whether there's a legal basis for them doing so, I think the issue is the reality of the way accounting is done for books and authors. I'm not actually taking a position on this from either side, just observing that's an area stereotypically plagued with odd business practices that by coincidence rarely seem to favor the authors.
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cathshaffer
User: cathshaffer
Date: 2011-02-21 15:09 (UTC)
Subject: (no subject)
I think the only thing anyone can do is watch and wait. Although it makes sense to be vigilant for accounting irregularities, I don't think there's any reason to anticipate malfeasance from publishers--that's the part that bugs me. I am more worried that the Borders bankruptcy will force one or more publishers into bankruptcy, which would be much more of an earthquake in the industry overall. However, with Borders in Chapter 11, not Chapter 7, the more likely outcome is that this is going to be a blip and going forward will be "business as usual," as they say.

There's also some weird stuff in both of the SE posts on the subject. The contention that the bankruptcy court is going to disallow Borders inventory as inventory, because it's returnable is pretty bizarre. Borders is a public company traded on the NYSE, founded in 1971, with multibillion dollar gross sales--I think they know what is inventory and what is not! After all, they have to report it on their taxes and in their SEC filings. SE and other bloggers also do not consider the possibility of bankruptcy financing, which may get sorted out early this week, once the banks are open. A number of financial institutions specialize in providing operating capital to bankrupt institutions, and a business like Borders with $2.8 B in annual sales would seem a good candidate for that.
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Jay Lake
User: jaylake
Date: 2011-02-21 15:24 (UTC)
Subject: (no subject)
The arguments about books as inventory get pretty abstruse pretty fast, at least for my pea brain. But the contention about returnability is pretty significant, and book retail is the only major consumer products sector where that's applicable. Ie, for my part, I can't even begin to guess what to expect. I think you'd have to go back to the Crown Books bankruptcy for precedent.
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cathshaffer
User: cathshaffer
Date: 2011-02-21 19:11 (UTC)
Subject: (no subject)
I disagree. The fact that they are returnable does not make them not inventory. SE compares them to consignment goods, but a consignment shop never pays for the goods until they're sold. I just called a shop about consigning a piece of furniture. I would pay them a fee to place the item in the store, and then when it sells, the store takes a hefty commission. Borders does not take a commission on goods placed in their stores. They purchase books from a publisher, sell them, and then return what they can't sell for cash.

My main point was that if there was a question of the validity of books as inventory, you'd think that it would have been questioned at some point in the past forty years either by the IRS or the SEC--the SEC particularly since public companies have to produce audited financial statements.
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bradipo
User: bradipo
Date: 2011-02-22 16:01 (UTC)
Subject: (no subject)
In this case, I think it depends on the details of the author's contract with the publisher.

Most contracts provide for royalties based on the number of sales. But some sales count and others don't. (Sales as remainders, for example, are usually excluded.) And, of course, books that are given away (review copies, for example) don't count as sales.

A book that is sold at full price at a bookstore definitely ought to be considered a sale. But, what if the language in the author's contract that excludes remainder sales and review copies has a catch-all provision like "and other books for which the publisher receives no payment"?

I don't think there can be a general statement here. In many cases, it's going to come down to the specific wording in each individual contract.
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cathshaffer
User: cathshaffer
Date: 2011-02-22 16:12 (UTC)
Subject: (no subject)
So far no one has reported that they have a contract with that sort of wording, and such is certainly not documented at SE, where the speculatin' is being done. At this point, it's all speculation, and rather wild speculation at that.

I would think a contract with that kind of wording would actually be quite unusual. Here's a model contract from the SFWA site:

http://www.sfwa.org/2009/07/model-contract-hardcover/

There's certainly nothing I can see in that contract that would allow a publisher to withhold payment to an author if the bookseller defaulted on a payment.
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User: cepetit.myopenid.com
Date: 2011-02-23 16:46 (UTC)
Subject: (no subject)
This is not a particularly easy thing to understand. The easiest way is to accept that "possession" (aka "inventory") is not the same thing as "ownership"... and that bankruptcy is concerned primarily with the legal concept of ownership.

By very imperfect analogy, consider who "owns" your car while you're still making payments on it. You have daily possession of the car; however, there's this little thing called a "security interest" and "title" held by your lender. You can't just sell the car for $1 to the neighbor kid to spite the bank; you're still on the hook for the balance of the loan, and simultaneously that did not transfer clear title to the neighbor kid.

Some of the same thing happens with books, complicated by the fact (denied by publishers!) that under the Copyright Act of 1976, the only authors who ever "sell" a book to a publisher are the poor schmucks who transfer the copyright. Instead, the author-publisher transaction is inherently a license, no matter what people call it; and that, itself, can make a huge difference in bankruptcy proceedings. Since the publisher can't transfer any better title than it has, you can see how this complicates things dealing with book retailers!

No, this is NOT easy. Or clear. (That's one reason it took three entries beyond the initial description just to demonstrate that the best case for publishers is to get around 2/3 of their receivables-as-of-16-February invoices paid.) I prescribe 400mg of ibuprofen, or the equivalent dose of your analgesic of choice. Besides... if it was easy and/or clear, we wouldn't need lots of expensive lawyers to resolve the issues, and you can bet that the legal profession won't tolerate THAT.
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cathshaffer
User: cathshaffer
Date: 2011-02-23 16:53 (UTC)
Subject: (no subject)
I'll pass on the ibuprofin for now. LOL.

I'm sorry you haven't got me convinced, but it's a very interesting theory.
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User: cepetit.myopenid.com
Date: 2011-02-23 18:24 (UTC)
Subject: (no subject)
It doesn't matter whether it convinces any of us; it convinces bankruptcy judges, such as the one who handled the Publishers Group West bankruptcy in the same district as is hearing the Borders bankruptcy; and the Carol Publishing Group bankruptcy (ditto); and...
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cathshaffer
User: cathshaffer
Date: 2011-02-23 18:58 (UTC)
Subject: (no subject)
Time will tell whether it convinces any court, or whether such an argument is even made.
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oaksylph
User: oaksylph
Date: 2011-02-22 18:14 (UTC)
Subject: (no subject)
re: The New Money... As a retailer who pays money to credit card companies off the top of every transaction and as a 'big sister' type who watches kids not realize how many fees they're paying for how few services, I can't help feeling that while the tech is cool, the opportunities for abuse in fees at every step of the data processing are distressingly numerous :(
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