The business of publishing is old world, mature, and has changed only incrementally over the past fifty years. One thing that can be said about publishing is that the biggest companies lead and the rest tend to follow. This is why little has changed in the way these publishers conduct business. The biggest are the most stodgy and the result is an industry that continues to shrink, while technology and the new marketing of the 21st century speed ahead.

Book are published, marketed, sold and distributed the same way they have been since the birth of the business. Certainly prices have changed dramatically, shipments are better coordinated, cover designs have evolved, merchandising has improved, but the basic business rules have not. Today there are still three general rules that apply to the business of publishing.

Rule number one: Every book is guaranteed to the bookseller, meaning, if they don’t sell at the bookstore, the publisher guarantees they’ll take them back. Returned books are as common place as paper and ink. Books have always been returnable. There are few if any retailers still in existence that will purchase newly published non-returnable books. The fallacy of this is that today, 2008, there are still some publishers that force their authors to pay several hundred dollars for the right to have their book considered returnable. Returnable books should be standard for any book contract. This is a clear example of how some publishers are not fluent in the ways of the business, and as a result they take advantage and prey on the pocketbooks of unsuspecting, and uninformed authors.

Rule number two: The business is about revenue, selling books. However there are two ways to look at revenue. For the Independent publishers and authors, revenue is when a book is sold and the money changes hands, that is a sale and represents the cleanest form of revenue. For the biggest publishers and all the others that want to compete in the marketplace, revenue is both gross and net. Gross is the number of copies multiplied by the cover price. This does not account for the returns that will eventually arrive at the publisher’s warehouse. The net price is what is left after all those books have been returned and counted. The big companies play with these numbers in a variety of ways and if you plan to compete in this market, you must be aware of this fact.

Rule number three: Bookseller real estate is for lease. When you walk into a bookstore and notice all those wonderful displays with multiple copies of the bestsellers, then you stroll down the aisles and look at the covers laying face up on the tables, keep in mind — this is not accidental. These retailers aren’t doing any favors.  All of that space has been leased by the publisher of those titles for a specified period of time. In fact, virtually all of the floor space is for lease, if you can afford the price. Typically the front of the store is the most expensive real estate and the price goes down slightly as you move to the back of the store. Bottom line, retail space in major retailers, including bookstores and mass merchants, is for lease.

If you want to compete in the traditional marketplace, you must keep these three rules in mind: It’s how the business operates.

Jerry D. Simmons is the author of WHAT WRITERS NEED TO KNOW ABOUT PUBLISHING. He is the creator of TIPS for WRITING from the PUBLISHING INSIDER a free eNewsletter that can be found at WritersReaders.com. He is also the founder of the leading social networking website for writers, authors and readers NothingBinding.com. For comments or questions you can reach Jerry via email jerry@writersreaders.com.