HARPER COLLINS CUTS AUTHOR ADVANCES

Pasted article from Harper Collins article

HarperCollins to Cut Writer Advances
By M . RICH NEW SERVICES
HarperCollins Publishers is forming a new publishing group that will substitute profit and cost sharing with authors instead of cash advances and will eliminate the costly practice of allowing booksellers to return unsold copies.
In a move that surprised many industry insiders, HarperCollins announced on Thursday that Robert S. Miller, the founding publisher of Hyperion, the adult books division of the Walt Disney Company, would leave his post of 17 years to lead this new, as yet unnamed entity.
The new unit is HarperCollins effort to address what its executives see as some of the more vexing issues of the book industry. The idea is, Lets take all the things that we think are wrong with this business and try to change them, said Mr. Miller, 51. It really seemed to require a start-up from scratch because it will be very experimental.
The new group will also release electronic books and digital audio editions of all its titles, said Jane Friedman, president and chief executive of HarperCollins, a unit of theNews Corporation.
At this moment of real volatility in the book business, when we are all recognizing things that are difficult to contend with, like growing advances and returns and that people are reading more online, we want to give them information in any format that they want.
The new group is entering a difficult market for books generally. Citing economic uncertainty, the Borders Group announced last month that it was considering selling itself. Barnes & Noble also said it expected first-quarter results to be slightly down from the previous year.
Author advances and bookseller returns have long troubled the publishing industry. Best-selling authors can command advances so high that publishers often come away with slim profits, even for books that are significant successes. Publishers also sometimes offer high advances to untested authors in the hopes of creating new hits, but those gambles do not pan out.