In light of this New York Times report about booksellers charging for events, Slate media critic Jack Shafer points us (via Twitter) to this 2008 analysis of the economics of in-store events by Penguin’s Colleen Lindsay:

Okay, let’s say that you’re a bookseller and want to host Author X at your store. Author X is pretty popular these days and everyone wants him, so the publisher may ask you to put together a proposal for the event. In the proposal, you’ll outline in great detail all of the awesome stuff you plan to do to promote the Author X event. You’ll also make a promise to bring in a certain number of copies for the event. A few weeks (sometimes months) go by and then you hear from your sales rep that the publicity department has okayed sending Author X to your store for an event.

Now you start promoting. Of course you’ll place an announcement in all the free local online and print calendars, but that’s not enough. You promised the publisher a certain amount of promotion for the event so now you’re going to spend money promoting the event via your print and online newsletter, and probably place some sort of advertising in a local paper. You’ll create in-store signage that is visible and prominently placed. (The publisher may also throw in a 24 x 26 foam-core blow-up of the book jacket that may or may not be destroyed by the time it arrives.) Let’s say that all of this (except the foam-core sign) comes to about $400 (a low estimate, btw). Let’s count the cost of the extra two booksellers you add to the schedule to work the event (We won’t count the salary of the event manager). 4 hours x $9 an hour x 2 persons = $72. Now let’s say that you order in 120 copies of the book. This is an optimistic order but you don’t want to disappoint the author or the publisher, so you bring in enough books to create decorative stacks around the store.

So let’s add things up: 120 copies of the book x $13.18 (the cost of the $24.95 book less your retailer’s discount) comes to $1581.60. So far this event has cost the bookstore $2053.60 and it hasn’t even started yet.

Now let’s cut over to the publisher’s end. The publicist must provide for Author X the following things: airfare – and remember that these are usually one-way tickets as the publicist is rarely flying an author back to the airport of origin after the event – $475; hotel room in city of event – $250; meals for day of event – $100 per diem; media escort for day of event (a media escort picks up the author at the airport and gets the author to and from all engagements while in the media escort’s city) – $300. Oh, and hey! That foam core blow-up of the book jacket that I mentioned above? That bad boy is $100. So far the publisher has spent $1225 and this is one of the less expensive cities on the tour.

However, on night of the event, the store actually sells only 43 copies of the book (which is actually a higher than average number for an event), which brings in $1072.85 (43 x $24.95, the cover price of the book). The author signs another 30 for stock, and the bookstore returns the rest. We’re assuming that the 30 he just signed for stock will sell, by the way. They usually do. So that another $748.50; gross earnings for the night = $1821.35. Now let’s adjust the expenditures to account for the books returned: 73 books x $13.18 = $962.14 + $400 for promotion and $72 for the employees. Total actual cost of this event = $1434.14.

The net profit to the bookstore for this event? $387.21, which isn’t all that much when you consider the enormous effort expended. In reality, a bookstore would like to see about three times that amount for each event.

The publisher, however, which has spent $1225 to get the author to the event, has recouped only $962.14, making their net loss $262.86. (They’ll probably lose even more that if you consider that many publishers now also pay freight costs.) Consider that the average bookstore tour is usually eight to ten cities, and well, that’s a considerable chunk of cash to throw away.

The rest of the piece is posted here. Would be interesting to see bookseller reactions in the comments section, especially as the above math was done by an employee of a large New York publisher.