Until the 1970s, the book industry comprised dozens of independent companies, some small and some large, whose only business was book publishing. Bookstores were likewise independent and locally owned. I worked in two bookstores during the late 1960s and early 1970s.
At that time, the publishers set the retail price for each title and sold them to bookstores at a 40% discount. Bookstores, therefore, could not compete on price. Publishers also determined how many copies of each title to print, based on their assessment of how well it would sell. To this day, most titles do not make a profit in the book business. Publishers have always relied on their best sellers to make up for weak sales of other titles. In fact, publishers with enough popular titles could afford to publish book they considered important but knew would lose money.
Once a print run was finished, the publishers would keep it in a warehouse until it sold all of the copies. At that time, it could decide to print more in the case of titles for which there was still strong demand, or simply let it go out of print and delete the title from its catalog. Sometimes, if a title was taking up too much valuable space in the warehouse, the publisher sold what was left (the remainder) to other companies who sold them at greatly reduced priced.
A number of shocks hit the book business beginning in the late 1970s. In 1977, Crown Books opened its first store. It challenged the publishers’ right to set prices and offered everything at a discount. Finally stores could compete on price. Then in 1979, the Thor Power Tool Company lost an important case before the Supreme Court. http://www.sfwa.org/bulletin/articles/thor.htm
In that case, the company argued that it had reduced the value of unsold inventory to what it considered fair market value according to “generally accepted accounting principles” and that the Internal Revenue Service had improperly refused to allow a write-off for the lower value of the inventory. The Supreme Court ruled, “There is no presumption that an inventory practice conformable to “generally accepted accounting principles” is valid for tax purposes. Such a presumption is insupportable in light of the statute, this Court’s past decisions, and the differing objectives of tax and financial accounting.”
The book business had treated its inventory much the same way as Thor Power Tool. Publishers could no longer afford to keep backlist titles as long as they had before. Without strong customer demand for a given title, it became more of a liability than an asset, and publishers adjusted by reducing initial print runs and remaindering books much sooner than it had before.
In 1994 Amazon.com pioneered selling books online. Unlike a traditional bookstore, it had no physical presence and no warehouse. It had no constraints on the inventory it could offer. Its customers could order the most obscure titles in print. Later, Amazon and its competitors started offering used books. The remainder book business has also gone on line.
Many web companies sell remainder books in quantity to other companies that take delivery on the inventory and sell it, either in a store or in a home-based Internet business. Many others sell remainders online individually to customers, both directly and through “affiliate marketing.” That is, a company such as my own All-Purpose Guru Alert offer links to one or more of the larger companies. The link is at the top left in the sidebar of every post.
The All-Purpose Guru Alert offers bargain books according to a newly popular kind of sales site, offering one carefully chosen title every day to complement the major topics covered The All-Purpose Guru family of blogs. The links for past deals still work as long as the larger company still has the titles in stock, but supplies are limited.Google+