NEW YORK — Has the book business gone Hollywood?
Publishers may cringe at the idea, but their business has become a spending contest, with editors throwing so much cash at star authors that some of the year’s bestselling books stand little chance of ever reaching profitability.
Michael Crichton just took a Jurassic-size bite out of HarperCollins, inking a two-book deal for $40 million. Yale law professor Stephen Carter may just have become the highest-paid first novelist in history, selling Knopf his first and second novels for $4 million. Tom Clancy recently sold two books to Penguin Putnam for $45 million. Mary Higgins Clark has a new five-book, $64 million deal with Simon & Schuster. And the Senate Ethics Committee recently approved Hillary Clinton’s $8 million deal with Simon & Schuster.
If advances are traveling north, book sales remain almost stationary. The industry saw $24 billion in sales in 1999, up from $23 billion in 1998.
But that hasn’t stopped editors from taking Hollywood-style gambles. They’re staking their money on “event” books, and they want that message to get out. These days, a big buy often is a marketing ploy, the first signal to the bookselling world and the media that a book is going to blow into stores on a cyclone of hype.
“It’s easy to blame the agents,” says Farrar Straus & Giroux publisher Jonathan Galassi. “But it’s the publishers who throw these offers in the ring.”
As in Hollywood, some publishers are trying to defray front-end costs by experimenting with new models of author profit participation. But those deals — like Stephen King’s arrangement with Simon & Schuster, in which he receives close to 50% of revenues after certain well-defined fixed costs are repaid — remain rare.
Instead, publishers are relying on ancillary revenues — everything from audio rights to magazine sales — to bankroll their investments.
Hollywood studios have an established structure of output deals, including foreign rights, cable, video and network sales, to repay huge star salaries. Publishers, however, have few guarantees.
While HarperCollins, which acquired world English-language rights to the two Crichton books, can count on some $5 million in foreign sales for Crichton, the house might have to sell 3 million copies of each novel in hardcover, and 6 million in paperback, to earn the other $15 million.
Crichton’s last novel, “Timeline,” has seen less than half that sales volume.
Like studios staking out a chunk of summer real estate, publishers don’t just look at a big buy in terms of the promise of future sales. It’s a market wedge — a hot commodity to rally the sales force and an icon around which a house can build its entire catalog.
“Sales reps love the idea of walking into a bookstore and saying, ‘We have the new Michael Crichton,’ ” says HarperCollins prexy Jane Friedman. “It does get attention.”
But publishers don’t have Hollywood-size advertising budgets to help launch a book on the international stage.
Media street smarts
Publishers have grown much more media-smart in the last 10 years, says Knopf publicity director Paul Bogards.
“Publishers are good at defining the audiences they want to reach in both narrowcasting and broadcasting,” he says.
But publicity has its limits. Many studio pics receive full-page ad treatment in the New York Times week after week, while most authors would kill for a single ad in the Times.
That has made publishers even more reliant on brand-name authors who generate their own publicity.
As Crichton’s agent Lynn Nesbit puts it, such writers “bring in so much more than the number of sales. They lead the whole list. They’re pulling everyone else along with them.”
But there are few writers in that stratosphere — “only a handful,” says Friedman — and they’ve become increasingly difficult to hold onto.
The big-money game has helped erode the loyalty that once glued writers to imprints, as major authors including Crichton, Clancy and James Patterson have jumped from one publisher or agency to another with the glee of baseball free agents.
Crichton’s deal with HarperCollins came as a blow to Knopf, his publisher since he wrote “The Andromeda Strain” as a medical student 30 years ago.
“The interesting question,” says Simon & Schuster prexy Jack Romanos, “is who loses more: the publisher who loses the author or the publisher who acquires the author if the advance is ridiculously high.”
While Friedman declines to discuss the economics of the Crichton deal, the signing is a gamble. HarperCollins is enjoying a period of great prosperity under Friedman, and will have 18 books on the March 4 New York Times bestseller list. But the house only recently rebounded from hard times.
In 1997, HarperCollins canceled more than 100 book contracts, took a $270 million writeoff and was said to be on the block — problems that were linked to overspending on books such as Jay Leno’s “Leading With My Chin.” Leno’s advance was reported to be more than $4 million, and the house sold far fewer than the 1 million copies it claimed to have printed.
What’s to blame
Friedman disagrees that runaway advances are to blame for the industry’s woes.
“What kills an industry is bad publishing, not the advances,” she says. “I’m running a very profitable business, and I’m not going to do anything to put this company at risk.”
Compounding such risks is a returns policy in the book trade that allows a bookstore to ship unsold books back to a publisher — at the publisher’s expense. Publishers suffered $7.1 billion in returns in 2000, according to a recent report from the Publishers Marketing Assn.
And however rational the publishing strategy of a house that bets the farm on a new book, there’s no way to guarantee it will be a hit.
“The biggest piece of fiction of all is the (profit-and-loss) statement,” says William Morris New York lit head Jennifer Rudolph Walsh. “No two books are alike. … until a book is published, the profit-and-loss expectations are based on fantasy.”
What bedevils editors on the losing end of inflated book auctions is that nobody accepts blame for the skyrocketing advances.
“The problem with book advances,” says Norton editor-in-chief Starling Lawrence, “is that they’re always perceived as somebody else’s problem, until that day when the final return is counted and a bean-counter in a green eyeshade tells you that you have an unearned advance of $100,000. For 15 minutes you feel bad, then you move on to something else.”
The party that most often is on the losing end of these deals is the author whose books sell for a huge sum, then fizzle. It’s extremely difficult for a writer to bounce back when his book doesn’t earn enough to justify a huge advance, says FSG’s Galassi.
The landscape is strewn with such writers, he says: “They’re a bit like Roman gladiators. Only a few can win the brass ring.”