June 25th, 2012

Today's Activities Include: Rain

The morning started early when T. decided to get up and wanted his iPad. Which R. and I failed to track down last night and put on the charger. I _always_ make sure it is found and on the charger and, sure enough, when I didn't, there was a massive, running temper tantrum as T. attempted to communicate that he wanted his iPad by saying it wasn't where it belonged: "No iPad!" while R. persisted in understanding his words to mean, "I don't want an iPad." *sigh*

R. was unable to conduct a basic search pattern in part because he had already checked all the logical places and failed to look in the "illogical" places, that is, the van where T. had been the day before but R. forgot about that.

After breakfast (which, stunningly, was not horrifyingly unhealthy for a change), the kids and I went to the library to play (briefly) on the playground before dropping some books off for the Friends and then checking out two pictures books. Upon returning home, we pressed our luck with an abbreviated walk with M., at which point it started sprinkling. T. sensibly turned around and we got back before it completely dumped on us. Which is what it is continuing to do.

B. took T. to the grocery store to get A. some Reese's Pieces, which we mysteriously ran completely out of (I didn't say the morning _stayed_ healthy), while I cooked some chili and played with A. (by pretending to go to the store with the new play cash register, the play food, the play shopping cart and the actual grocery bags).

I am now sitting down. It is way too early for me to be this tired and there's a lot left to do. Also, T. is really resisting the idea of swimming lessons later today. *sigh*

More from _Two Bit Culture_: Shimkin buys Pocket books then IPOs

Marshall Field III (the man, not the store) died. His estate decided to sell Pocket books which until this point (1957) had been entirely privately held. Shimkin (remember: sent a stenographer to take down Carnegie's spiel; asked Lasser to write a tax prep guide) and James Jacobson, then vice president in charge of sales and Prudential Insurance came up with $5 million to buy it from the estate and then they took it public [ETA in 1960].

p 272

"Ronald Busch, then the assistant sales director at Bantam Books, recalled the reaction in the industry when Pocket Books made the financial disclosure required for a public stock sale. ... "they indicated in their prospectus that they had sold sixty million books in the prior year. And here we were at Bantam thinking we were doing pretty well and we hadn't even sold twenty million. We didn't even believe the figures. We thought they were gross and not net. But we found out that they were net ... We didn't realize at the time that Pocket Books represented such a lion's share of the business. There were no figures around to show what anybody was doing, so everybody assumed we were doing about the same. But they weren't. [Also] they had a lot of exclusive accounts where you didn't see any other paperback lines. For instance, Walgreen's" "

Think about this for a minute. Pocket Books is selling three or more books for ever book sold by the presumably next biggest competitor, itself a cartel with, presumably, board level access to the numbers at all the participating houses. These are people who, in theory, eat, drink, breathe, sleep and have sex with books. You would sort of think that that would notice when they were out and about that there were more of the little Kangaroos out there than there were roosters. 3X is a noticeable amount. 10% is not detectable. 3X should be detectable qualitatively. Informal sampling should spot it.

Moving right along.

Pocket Books had grown beyond paperbacks. "under Shimkin and Jacobson the company had expanded ... Jacobson set up a subsidiary called Affiliated Publishers, which distributed Pocket Books, Simon & Schuster books, Guild Press, Golden Key comics, and the incredibly successful Golden Books, formerly published by Simon & Schuster but jointly acquired by Pocket Books and Western Printing ... with unit sales far exceeding even those of Pocket Books' paperbacks. ... the leadership of Pocket books saw themselves as more than simply paperback publishers... taking the paperback in the direction of comprehensive publishing."

Well, duh. Field _had_ tried to do this with the purchase of Grosset & Dunlap after all. Just because he failed at the start didn't mean he was just going to go, oh, well, a cartel has stymied me I'll just give up. And we've already established that Shimkin takes smart to an entirely new level.

It isn't just that Bantam and its membership was feckless. It's that they were so consumed with the idea that they were doing well that it seems like it just never occurred to them to lie awake at night wondering if they could do better.

ETA: Also, when Busch says he thought the figures were gross and not net, I think he is still talking about units not dollars, altho I'm not 100% certain. I intend to get around to blogging the story about Oscar Dystel's arrival at Bantam.

More from _Two Bit Culture_: Oscar Dystel Fixes Bantam

Some libertarian economic theory says we don't really need to worry about cartels on the premise that they tend to become fat and stupid and get outcompeted, also, are inherently unstable. I don't actually believe this. Most of the time.

In the early 1950s, many paperback lines were overproducing and generally not being brilliant. Think: petri dish population boom. On top of those problems, Bantam's board was very active and kicked Ballantine (the man) out, after which they started losing money (duh). The head of Grosset & Dunlap was approached by Oscar Dystel to see if they might be interested in what would ultimately become People magazine (Dystel is the guy responsible for Coronet becoming the massively successful magazine we've all completely forgotten ever existed). Dystel's proposal was ignored/rejected, but Dystel himself was hired to run Bantam, compensation including a percentage of earnings.

p 251

"Larry Hughes, then of Pocket Books, said, "Bantam was a sleeping giant until Oscar Dystel began to make it move. They had the backing of the hardcover houses, whose books they could have locked up, and Curtis. We could never understand why they didn't wipe the floor with us."

Here's Davis' description of how paperback distribution was not working at the time.

"In general, the wholesaler's order was predetermined by the publishers ... The wholesaler in turn parceled out the books to the local retailers based on his assumption of what the drugstore or corner newsstand could sell. ...At best, the publishers would send out men like Larry Huges to "stoop, squint, and squat," visually checking inventories at the local level."

Translation: jobbers didn't exist yet in this area.

This is where the only-send-the-covers-back policy came from; retailers and wholesalers were just landfilling books because they didn't have the space for them. Dystel's first step was to get all the backlog returned, to deal with wholesaler and retailer anger. Then he reduced print runs and deliveries to undershoot rather than overshoot to correct consumer psychology and prevent the returns policy from recurring. "By the end of 1955, using this undershipping strategy, Bantam had increased reorders from wholesalers by 348 percent over 1954. Returns were down 38.7 percent and sales went from 15,346,000 in 1954 to 18,124,000 ... in 1955."

Dystel then went on to reduce the emphasis on westerns, change the cover art, buy up some massive bestsellers, in part by demonstrating they could do a better job co-ordinating promotion with Hollywood, rather than by simply offering still more money.

So with Dystel on board and correcting the most obvious stupidity, and having implemented a successful, if unsubtle and expensive strategy (buy bestsellers, co-ordinate promotion with the movie release), Bantam's board is feeling really good. Meanwhile, however, the rest of the crowd is not sitting still. Dystel quit abusing the existing distribution system, but during the same time frame (tail end of the 1960s) newsstand distribution was starting to be replaced with bookstore distribution, and the top-down strategy was starting to get a little feedback through a jobber system. The newsstand story is an interesting one in particular.

Dell had been locked into the American News Company for its distribution. They got some new people in editorial, who picked up _Bonjour Tristesse_ and _Peyton Place_ in advance of hardcover publication. The team also broke with American News.

"Bud Egbert, then a regional sales manager for Pocket Books, recalled the situation. "Dell was a real vicious sort of thing in the minds of everybody after they went through the independents and the ANC. Dell looked and saw which was best in a town and waved a stick between the two. It was considered a very evil thing to do at the time because everybody should have their franchised territories."" ANC didn't force Dell to pick one until 1957, by which time _Bonjour Tristesse_ and _Peyton Place_ gave Dell the ability to decide not to stick with ANC.

I'm going back and forth in my mind between whether Egbert is right to consider this a franchise/free-rider issue, or if this is straight up market division and therefore an antitrust no-no. I'm not sure; I think I'd need to understand the underlying contracts a lot better to know.