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Message: <blockquote data-quote="JLowder" data-source="post: 9680810" data-attributes="member: 28003">Right. The context for the book returns matter a lot. They are not the cause of the failure. The returns are a result of the core business failures.For folks who don't know:TSR had a deal with Random House going back to Gary's days. Random House distributed TSR products to the book trade—most importantly book chains and the mall bookstores that loved D&D and especially TSR's fiction releases. As they 80s wore on, that channel became very lucrative for TSR and for their distributor to that channel, Random House.Book channel sales are typically fully returnable. The publisher sends a book to a Barnes & Noble store. The book does not sell. The store returns the book, either the whole book or just the cover to show the book cannot be resold, and gets credit or money for the return. (TSR's books and games were returned whole because of the way they were sold.) That's a standard part of the book channel. It makes book channel sales riskier for a publisher than, say, selling your stuff to a game store, where the items are not returnable. The store orders it. The store is stuck with it until it sells.Random House was TSR's exclusive rep for the book trade channels. When one of those mall stores wanted a copy of The Crystal Shard they ordered it through Random House.The unusual part of the TSR deal with Random House was that RH paid TSR, essentially, on ship not after a longer set period, not when the book sold through to the store. Initially, this was to help TSR pay for print runs for products Random House pretty much knew they were going to sell. They paid when TSR shipped the books because they assumed those would sell out quickly and TSR would need the fast cash to go back to print quickly for more copies of a book or would need to print new products that would also sell out. It was a cash flow thing. RH was willing to risk the early payment so TSR would have the cash flow to get more products into print, so RH could provide them to the book trade and make a lot of money themselves as a distributor. Everyone won. For a while.Over time, TSR started manipulating the deal. They overprinted some products or added more products to the schedule to get more money faster. The overprinted products and the extra products added to the schedule were not selling out from Random House, though, and were building up in the warehouses. This increased TSR's cash flow, but, remember, all that product is returnable. If it gets returned, you have to pay back the money paid on ship. The more product you build up in the warehouses, the greater your risk.Eventually, Random House did return a bunch of product and then ask for the money to be paid back to cover those returns. Ben Riggs talks about how much that was in Slaying the Dragon. It was a lot. Tens of millions.Where the context matters here is that Random House did not return all the products because they didn't think they would sell. They sent everything back, flushed every TSR product out of their warehouses, because TSR ended their distribution deal with RH. RH couldn't sell that product even if they wanted to. They were no longer TSR's distributor of record.The TSR fiction in particular was still selling pretty well through Random House. It's a mistake to assume the returned fiction was returned because it was not selling or would not have sold. Yes, RH returned a lot of fiction; no shock, as they were selling to the book trade. Yes, TSR was overprinting some titles and the books were not going back to print for new runs as quickly by 1994 as they were in even 1990. But fiction has a longer shelf life than games. Many of those fiction books RH flushed from their warehouses would have sold, had they been given time. If TSR had not ended the distribution deal.To me, the underlying causes for TSR's collapse are really:<ul> <li data-xf-list-type="ul">Longterm manipulation of the Random House distribution agreement to use RH as a source of cash flow (especially by adding titles to the schedule and overprinting—especially when staff were telling management not to assume, say, every Realms novel would sell as well as NYT bestseller Waterdeep had. Management ignored the warnings.);</li> <li data-xf-list-type="ul">Flooding the hobby market with too many products (especially those intended to take up shelf space and, supposedly, stop hobby retailers supporting rivals like White Wolf or WotC by tying up the store's money for new products. Marvel tried this in the 90s, too, and failed just as badly.);</li> <li data-xf-list-type="ul">Not showing enough patience with new lines or setting, so that retailers and customers lost faith in the lines seeing longterm support (the desperate-for-a-hit death spiral.);</li> <li data-xf-list-type="ul">Ending the RH distribution deal without a plan or the resources to deal with contractually obligated returns.</li> </ul>The flood of returns from Random House, and the resulting debt bomb, were a result of these bad decisions and practices. I would add in things like the mistreatment of creators, staff, and business partners—even the disdainful way TSR treated the rest of the tabletop publishing community and fans—as additional contributing factors, bad actions that exacerbated the big four failures.</blockquote>

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