Tuesday, September 28, 2004

where do these remainders come from anyway?

I was recently asked about remainders and the court decision which created them. The facts around the tax decision which created the remainder market, (and also created the "cut-out" record market, if you remember back that far) are pretty dry, but their effect has been profound. The case (IRS vs. Thor Power Tools) was essentially about widgets, and in many ways the application of the the Supreme Courts decision made sense for widgets (which were expected to become obsolete someday, and therefore companies were depreciating them), but not for books (or records) where publishers wanted to keep a backlist in the warehouse to meet demand without having to reprint in small, expensive batches. The decision made it more expensive for companies to keep inventories of all types, and felt the need to a) print smaller runs, and b) dump the inventory which doesn't sell quickly. It also lead to publishers speeding up the cloth/trade paper/massmarket cycle to the point where we see it today, with cloth editions going out of print ridiculously fast.

I had the pleasure of working for Powell's Books Chicago for a few years beginning in the early-nineteen eighties, and witnessed first hand some of the small publisher's warehouses which were emptied as a result of the decision. Sometimes Powell's stepped in to buy the inventory, occasionally unearthing treasures in the process. Two of my favorite examples of this were the small esoteric publisher Open Court and the University of Chicago's Oriental Institute. Open Court had a large warehouse filled with titles which stretched back to the 1910's, many still in warehouse paper wrappers, with prices of 80 cents or $1.15 printed on them. Titles included the first English translation of a work by Kant, works on origami, philosophical and scientific work by Ernst Mach, and the eccentric works of the press' editor, Paul Carus .

The Oriental Institute held yearly sales of slightly bruised books, including many stunning folios of various archaeological projects in the Near East. But a few years after the Thor decision, the Institute held a much larger sale, clearing the shelves of many huge, expensive volumes. Everyone I knew at the time bought armloads of the books, and years later I sold mine for a very good profit. Now most of the works sold at the sale are either no longer in print, or only available as expensive reprints or in microfiche.

While the idea of "remainders" had existed prior to the legal decision, every publisher was driven to deal with them (or chose to pulp unwanted inventory, and write off the production costs. The ramifications extended to publisher's relationships with authors, which is its own story. A number of companies like Daedalus, Scholar's Bookshelf, Texas Bookman and Powell's have done a very good job of using the remaindered materials. Some even create books especially for the remainder market, with the annual remainder trade show in Chicago, CIROBE, turning into a major event on its own terms.

Some additional links:

. the actual decision
.. a pretty good technical description of the tax aspects
... a librarian's take on all this
.... effects on small press poetry


C. Max said...

Thanks for the info.. I didn't know the background on this story. It seems to me the book industry was probably better off before all this happened.

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