Commission Impossible
Richard Hunt -- 3/27/00
By learning the history of commission reps, we hope to understand where the future will lead
Commission reps were on the scene before online bookselling. Before national chain superstores, co-op and BEA. Before IBID, NACS and BISG. Before wholesalers. So long a fixture on the bookselling scene, one can forgive the assumption that commission reps were in place soon after Gutenberg ordered a second printing to meet demand at monastery gift shops.
The legend and lore of commission reps rival the taming of the Wild West. With a steamer trunk of sample finished books (no catalogues or blads back then), the reps back then ventured out to their respective territories for months at a time. No phone or fax--just a love of books, a satchel full of self-confidence and the open road.
Then as today, commission reps functioned as a crucial link in the flow of books from publisher to bookseller to reader, the only difference being they were the primary conduit for books entering the marketplace. Publishers with their own sales force were a rarity rather than a rule a few decades ago.
Recently, there's been a tightening in the belts of commission groups around the country. Not surprisingly, the fiscal health of independent book reps is tied to independent booksellers, since independents form the bulk of any commission group's account base. Twenty years ago, independent bookstores were boasting double-digit increases. Both "independent" groups figure predominantly in the development of the book industry in the U.S., creating larger-than-life reputations, although the general consumer knows the retailers better simply by virtue of exposure. Yet for every Carl Kroch and Mona Ives and Michael Powell, there's a commission group that contributed a similar eponymous brick in the wall.
Advantages and Disadvantages
The number one advantage for using a commission sales force is that it allows the publisher to focus first and foremost on producing the book itself (and hopefully a corresponding marketing plan) instead of dividing the resources of the house to both build a list and build a sales force. Although there are still headline-making, extravagant book advances, the average advance on books is still roughly $20,000. The cost for a house sales rep ranges from $75,000 to $100,000 once salary, bonus, car, insurance, meals, hotels, health care and other expenses are calculated. Hence the first equation: one rep or five new books. When these costs are averaged over the number of accounts a rep covers, industry rule of thumb today is that a sales call by a house rep must net $500 to break even. In the case of commission reps, since no sales overhead (except for catalogues and order forms) accrues until books are actually "bought" by an account, it's clear why this arrangement is desirable for many operations: sales reduced to the most fundamental level.
"The nice thing about a commission rep structure is its efficiencies," said John Hopkins, who covers Colorado and 14 other Western states for the McCormick group. "When a publisher's sales go up, the commissions go up, and because business is good, the publisher is happy to pay them. When the sales go down, likewise commissions."
The numbers upon which a commission rep's livelihood is earned are straightforward, another reason these groups have been part of the industry for so long. For every book sold to a bookstore, the rep generally receives 10% of the list price; sales to a wholesaler are roughly 5%. But Hopkins points out a stumbling block for reps receiving credit: "If a store orders frontlist from a rep--say three copies of a title--and g s to a wholesaler for a nine-copy reorder, then the rep has 'lost' 75% of possible income on that title. Unless the store returns three copies to the publisher--which is easier than to a wholesaler, given penalties, etc.--in which case the rep has wasted his time. He gets nothing. This is very common."
One oft-heard lament from publishers is that commission reps are so focused on selling frontlist that they neglect other functions house reps perform like setting up co-op and newsletter promotions, acting as an advocate for author signings, cleaning up databases and working conventions. Because commission reps roam their territories with no weekly reports to file, they're periodically accused of "giving good conference," that is, being very gung-ho during the twice-yearly sales meetings but never heard from again during the course of the season.
The purpose of the job is the same whether a house or a commission rep--calling on accounts to present and take advance orders for new titles. And within that boiled-down job description, the reason for the profession's longevity emerges: there is no substitute for sitting face to face with a buyer to secure an order. Catalogues and heartfelt letters can be tossed. Telephone messages can be ignored. But an individual demands a response, even if it's occasionally a skip. It's these orders that establish print runs and solidify promotion schedules.
It would be wrong for any publisher utilizing commission reps to assume success for its books by virtue of having representation. But because the rules of the game have changed so, the size of orders isn't always a true reflection on how well any rep d s his or her job. The mindset of buyers has changed forever with marketplace realities and the incontrovertible power of an inventory system. Buyers know one computer keystroke will illuminate what happens to a book that d s not carry a well-developed plan for getting the word out about its existence and commercial appeal. Very, very, very few books sell purely from being on the right bookstore shelf at the right time. Often lack of sales can be attributed to how well the publisher is preparing the book, not how well a commission rep is presenting them.
Like baseball managers who get axed when the players don't produce, all too often the commission reps are held accountable even when the titles they represent don't come equipped with that promised horsepower. And since smaller houses most often employ commission groups, these reps are sometimes unjustly labeled as ineffective in advancing new titles.
No large publisher sets the first printing without orders from the major customers, hence timely reporting from its sales force is crucial. Smaller houses (most often represented by commission reps) print first and hope advance orders will total close to that number, an exercise in good faith and experience in specific categories.
Commission Rep Defined
Perhaps more than in any other area of the book industry (which tends to trade on young energy since the pay scale isn't high), commission reps bank on a great deal of experience. From a survey of NAIPR (National Association of Independent Publisher Representatives), the average tenure of respondents was 34 years in the book business, with 25 of these spent as a commission rep. Most reps called on 85-100 accounts, down 50% over the last five years. Representing 32 publishers on average, the respondents estimated they spent 18 weeks on the road and presented over 1,000 books per season (remarkably, respondents' figures ranged from 400 to 2,000).
Many of the challenges facing commission reps are at play in every sector of the industry. Bill McGarr, from McGarr and Associates in the Midwest, cited a few of the factors most affecting his job: "Chain expansion, publisher consolidation, the upward spiral of expenses, the downward spiral of account base and threats from Internet-based providers."
Even changes that seem like evolutionary progress can lower a commission rep's income. The push for just-in-time inventory, which independent bookstores see as a good thing to keep their operating costs down, is bad for commission reps as bookstores shift from strong initial orders to regular reorders from wholesalers. And if the wholesaler is located outside the territory, the book's publisher decides whether any payment is made at all; some do provide a subsidy for orders to national wholesalers. To some degree, these monies are available only because these national distributors can provide the reporting. Regional wholesalers, while usually bigger proponents of the regional and midsized publishing houses that use commission groups, cannot always generate the reports needed to determine compensation.
The growing reliance on wholesalers has resulted in other changes for commission reps. Bill Palizzolo, who covers New England with S&B Sales Associates, said he has "become far more reliant upon sidelines which cannot be reordered through distributors, and far less reliant on books, which can. I no longer have to inventory a store to determine their backlist needs, because they now reorder primarily through distributors for which I receive little, if any, remuneration."
Many commission reps are more involved with industry issues as lifelong students. NAIPR arranges for informational seminars when members are in town (and at BEA). This past December, more than 50 NAIPR member reps met in New York on a Sunday evening to hear Roger Williams, field sales manager of Simon & Schuster, and Tom Korman, director of trade sales for Dorling Kindersley, speculate on the possibilities of larger publishers using commission reps to enhance their sales force.
NAIPR also revealed the breadth of its interests by forming committees for benefits, education, ethics, legal affairs, publisher relations, technology, trade relations and vision. The very fact that NAIPR exists reflects on the members' need for medical insurance policies, legal counsel, collection help in securing outstanding commissions, as well as their commitment to the industry--nowhere else on the rep level is there any national association aimed at supporting and benefiting this slice of the industry. As Ralph Woodward, past secretary of NAIPR, noted, its Web site (www.naipr.org) "is another sign that old-time reps are a thing of the past and that contemporary book travelers are fully equipped with their computers and their adoption of new technology to communicate with customers and clients at 56 kbps."
This is not to suggest that house reps show any less professionalism to the trade--many work at regional bookselling associations and/or provide local literary resources. It's just that they are not forced to mobilize and organize on the macro-level for job security to the same degree.
Perhaps because of the larger mindset they are forced to maintain, commission reps express industrywide concerns when asked what is most pressing to their future. George Carroll, a commission rep with Redsides Publishing who covers the Pacific Northwest (and also holds the distinction of being one of the first reps to have his own Web page), worries most about "how to drive customers into stores"--and how his publishers "can realistically publish books that don't have a shot at the chains or the dot-coms."
Bill Hoar, president of the Chesapeake and Hudson commission group, whose five members were awarded Rep of the Year commendation by New Atlantic Independent Booksellers Association, cited his chief concern: "To find a way to keep the children reading." Finally, Terry Hicks, from BookLink group in the Southeast, sounded a warning about the "consolidation of retail store purchasing power, which is beginning to limit title production, thus limiting creativity and in time will impact our very culture."
When gathering the group for a photo, one rep joked that this group was responsible for selling 50% of the ISBNs published annually. It may well be. Whatever the percentage, it is almost inevitable that it will grow, because of major publisher consolidation (with publishers' own sales forces) and the inevitably trimmed lists, and by the growth of small presses, who need the commission reps to get their books to market.
Crystal Ball
To peer into the crystal ball and conjure the future of books beyond 2001, the assumptions make a good news/bad news riff, along with a Catch-22 thrown in for good measure. The number and diversity of titles show no sign of being trimmed, since it seems unlikely that major houses will do anything more than tighten up, further focusing on brand-name authors and subjects. So the small and midsize houses should prosper by publishing books the big houses think will have too narrow an audience or will miss because the issues aren't on their radar. Because overhead costs keep rising, it seems unlikely that small and midsize publishers will ever establish their own house sales forces, so the prognosis for commission reps should be more good news.
But commission reps' future hinges not only on the number of titles being published, but the number of outlets that will carry those books. Although recently the number of independents on the American landscape grew, the overall numbers are essentially half what they were a decade ago. Regional wholesalers are also half the number they were a decade ago, which is bad news for commission reps. Many commission reps are actively searching out nontraditional outlets, or if located in Michigan, New York or Tennessee, making national account calls on behalf of their publishers.
Can the sheer number and range of titles published be steered toward small to midsized publishers and thereby also supporting bookstores and commission reps? It may be too soon to tell. For the sake of all involved, whatever the future holds, there's a place for commission reps.
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