What To Do When Your Publisher Fails

by | Apr 10, 2016


Unfortunately, it’s a fact. When a chamber publisher collapses, it usually leaves chambers stranded with no royalty check, no publication and promises to their member advertisers broken.

There is no easy way out, but there are ways to move forward and recover if it happens to you.

Why Publishers Fail

First, it’s important to understand why chamber directory publishers fail.

Typically a chamber directory publisher is working on several chamber publications at a time. They have advertiser revenue flowing in from multiple projects. It works out to be a lot a cash flow. For example, an average chamber membership directory or community guide might bring in $50K in revenue, multiply that by 20 chamber clients and a publisher’s got $1 million in cash coming into the business.

A good thing, right? Not necessarily. This is where the trouble starts. Because there is a lot of money coming in, it can be tempting to use more of that money than they should for general operating expenses rather than setting it aside in separate savings accounts for each individual chamber project. Instead of segregating the funds to ensure there is enough money to finance each project, they sometimes end up drawing on those funds to staff up or invest in things to help grow the business.

When a chamber directory publisher overextends itself the consequences to its chamber clients range from serious delays in the printing of their publications to the worst-case scenario of the publisher going belly up and leaving the chamber with no publication and no royalty check.

The four most common scenarios we’ve seen chambers experience when their chamber directory publisher fails are:

1. The book is delivered, but there’s no royalty payment coming.

2. The book is ready to go to press, but the publisher doesn’t have any money to print it.

3. Ad sales are done, the layout was started, but the publisher quit, didn’t provide the layout files, so there’s a lot work to get the   publication ready for press.

4. Ad sales were in progress when the publisher quit. Some members have already paid the publisher for their ads, but the Chamber has very little information to go on, no idea who bought what, how much they’ve paid or what they provided artwork.

In all cases, there is usually no money coming your way and the chamber has to foot the bill to fix the problem.

What to expect

If you find yourself in any of these scenarios, here’s what you can expect.

When a chamber directory publisher is failing, word spreads fast and other publishers quickly step up to the plate to offer rescues.

The value that chamber directory publishers have is in their contracts with chambers. It is quite common for a failing chamber directory publisher to attempt to sell its contracts to another publisher. The longer the contract term, the more it is worth.

For some chambers, that may be a good solution. It is an easy hands-free fix. But carefully review what’s being offered. Often these types of rescues bind the chamber to a multi-year contract with an unknown company. Check their references carefully and on social media.

Also consider the possible ramifications. Keep in mind that if a chamber directory publisher rescues too many projects, they are investing in getting them done and delivering royalty, before they see any revenue from them.

How do they do that? From their current cash flow from other projects, outside investors or other debt. All but outside investors put a lot of strain on the publisher. That sets up the possibility of cash flow problems for them in the near future. You may find yourself in the same situation or worse a year or two down the road with your new chamber directory publisher.

Identifying Your Options

Review your contract. Some contracts say they can only be “assigned” subject to client approval. But if your contract says it can be sold and assigned, when your failing publisher sells out, you may be contractually bound to work with that new publisher.

Know your rights as it relates to the editorial content, photography and any maps. If you want to pursue a solution on your own and use existing content, you need to know if you own those assets or if the publisher owns them.

Find out what stage of the process your publication was in.

Do you have a list of all of the advertisers and what they paid?

Do you have access to ad materials – will the publisher give you the artwork?

Will the publisher give you all of the files that they have (layout, editorial, logos, photography, all of the production files)?

Whether you decide to go with a rescue from a new publisher or solve the problem on your own, work off of this mantra: think of your members first; get the project done. Start with the mindset that you can kiss your royalty goodbye. You have to make things right with your members before you can worry about your lost royalty.

Some chamber directory publishers offering to rescue will even offer to give you the lost royalty in exchange for several years under a future contract. This may or may not be good, and be mindful of the financial strain that will put on the publisher as mentioned earlier. There are also alternatives to turnkey publishers.

You Can Take Control

If you are not bound to a contract buy-out, you do have options. You can take control of the situation and we can help.

Chamber Marketing Partners was founded in 2000 to protect chambers from publisher collapses. Our model is different and proven, the chamber has control over every aspect of the project, including the revenue. Your members pay the chamber, not us.

We have helped chambers recover from failed publisher problems and grow their publications into strong revenue generators providing tremendous visibility and value for their members.

You DO have options and this challenge CAN be solved. Contact us to find out more on how we can help.

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