Pageant Press, Inc.

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1:- THE MATTER OF PAGEA:\T PRESS, INC , ET AL.

CONSENT ORDER, ETC. , IN REGARD TO THE ALLEGl,"' VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket C-1115. Complaint, Sept. %fi-Decisio?1, Sept. , 1.966 Consent order requiring a Ne\y York City subsidy publisher to cease misrepresenting in its advertising the profits which authors may make, the sales promoiion it gives its books, and making other false claims. COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the authority vested in it by said Acts, the Federal Trade Commission, having reason to believe that Pageant Press, Inc., a corporation, and Simon A. Halpcrn, individually and as offcer of said corporation, hereinafter' refened to as respondents, have violated the jJrovisions of said Act, and it appearing' to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows: PARAGRAPH 1. Respondent Pageant Press, Inc.. is a corporation organized, exisbng and doing business under and by virtue of the laws of the State of New York.

Respondent Simon A. Halpern is an individual and an offcer of the said corporate respondent. He formulates, directs and controls the acts, practices and policies of the said corporate respondent including the acts and practices hereinafter set forth. Said respondents have their offces and principal place of business at 101 Fifth Avenue, in the city of New York, State of New York.

PAR. 2. Respondents are now, and for more than foul' years last past have been, engaged in the arlvertising and soliciting of contracts for the publication of books for authors and prospective authors, and in the printing, promotion, sale and distribution of the contracting authors ' books.

PAR. 3. In the course and conduct of their business, respondents now cause, and for some time last past have caused, their said products, when sold, to be shipped from their place of business in the State of Ne\v York to contracting authors and purchasers thereof located in various other States of the United States and in PAGEANT PRESS , INC. , ET AL. 723 722 Complaint the District of Columbia, and maintain, and at al1 times mentioned herein have maintained, a substantjal course of trade in s::dd products in - commerce, as "commerce. is defined in the Federal Trade Commission Act.

PAR. 4: In the course and conduct of their aforesaid business and for the purpose of inducing the purchase of their services and products, the respondents have made numerous statements and representations respecting costs and sharing of costs of pubjications, the advertising, reviewing and distributing of the pub- Jications and the profits and benefits derived by the publishing authors in their promotions, in advertisements, in newspapers magazines and other periodicals, generaiJy purchased by authors and in circulars, letters, and in a brochure entitled "How To Get Your Book Published Promoted Distributed" which is sent to persons responding to the advertisements. Typical and ilustrative, but not all inclusive of such statements and representations are the following:

Q. \,\,1ho pays for the advertising and promotion of my book? A. We do. We pay for the national advertising and direct mail circulation on your book to the book trade, libraries and the reading public. \Ve provide and specify national advertising for all our books, at no extra cost to the author.

\Vy Authors Have Confidence in Pageant Press , , , Pageant' s contracts specify national advertising, publicity and sales promotion for each book.

Payments to our authors total tens of thousands of dollars each year. These returns are based on orders from bookstores, department stores, wholesalers, libral' , colleges and universities all over the country and in foreign countries.

nd no,v. , ' See how Pageant Publicizes, Advertises, Distributes Your Book.

. , , A book needs the widest possible discussion in the reviewing- media of the country-whether magazines, newspapers, radio, television or public platform, Norman Cousins Sa turday Review . This fmaneial return is eale11ated to enable our authors to regain their entire cost plus a profit when the trial edition is sold, , ' The publishers agree to publish a flrst edition not exceeding. , , , Copies of said work within. , working'days, , However, jf you are tired of waiting for recognition-if you believe that your book has good sales possibjlities and that some enterprising publisher could make a lot of money with it, then subsidy publishing should appeal to you.

, g Complaint 70 F.

OUT authors receive a "10'lr return ($1.20) on a $3.00 book). Having your bock publisher! by Pageant Press is a business venture. Under our plan the author of a good steacJY seller can realize a sizeable profit. Our full page group advertisements in the I Bihle of the book business, The Book Bu:vel" S Guide, have resulted in ordel's from indepenrlent and cho.111 slJOps across the nation and ham f01' ign countries. . . Our ads arc designed to attract the bookseller s eye and his order. . OUY complete general cat810g is printed in Publishers ' Trade List Annual, which is distributed through over lO OOn 1lookstOTCS , schools, libraries overnm€nt purchasing- offces, alld practically every other outlet in the book world. Q. What Is The Attitude Of Reviewers And Booksellers To"\vard Subsidized Books? A. Pageant books have been reviewed in the most impoJ'tant newspapers of the country;.' from coast to coast. . . The New York Times has devoted a total of almost two full columns to four of our books. Our reviews have also ap. peared in syndicated ne\\"5 services, the column of noted commentators and national magazines in specialized fields. As for booksellers, "\ve regularly flll orders from wholesalers, chain book shops and independent dealers across the nation Hnd in foreign countries. (See back cover of brochure for a partial list.) Special-If \ve think your manuscript has unusual possibilities we wil offer you a straight royalty or partial subsidy contract. PAR. 5. By and through the use of the above quoted statements and representations, and others of sin1ilar import and meaning not specifica1Jy set out herein, respondents represent, and have represented, directly OJ' by implication:

1. That in most instances under their plan of publication the contl'actingauthol' will rccovel' all 01' substantially all of his 01' her entire investment.

2. That bookstores, department stores, wholesalers libraries colleges and universities thl'ughout the l:united States regularly purchase books in large numbers from the respondents. 3. That they assure and provide contracting authors national advertising- for their books, 4, That their ao\'crtising, publicity, and sales pl'omotjon call1paigns assure the success of the sale ano distribution of books published by them, 5, That they print and bind all the copies listed in the contract of the first edition of an author s book. 6, That books published by the respondents are reviewed by noted columnists, critics and other reviewing media \which include magazines, newspapers, radio, TV and etc. PAGEANT PRESS , INC. , ET AL. 725 722 Complaint 7. That they offer and enter into contracts or agreements with authors of manuscripts, determined to have UJlUS1",1 possibilities of success, whereby respondents agree to assume all or a portion of the publication, promotion and distribution costs and to compensate the author on tbe basis of the number of books sold. PAR. 6. In truth and in fact:

1. In most instal1es, authors who have their books published by the respondents do not recover all or substantially all of their entire investment.

2. The books published by the respondents are not regularly purchased in large numbers of bookstores, department stores wholesalers, libraries, colleges and universities throughout the United States.

3. Respondents do not nationally advertise any of their contracting authors' books. Such advertising, if any, consists of an insignificant one-inch column in the New York Times or New York Herald Tribune.

4. Respondents' advertising, publicity and sales promotion compaigns do not assure the success of the sales and distribution of the books published by them, Such sales success, if any, is generally accounted for by the ellorts of the individual authors. 5. Respondents do not print or bind all the copies called for in the first edition as listed in the contract with the author. 6. Books published by respondents have not been reviewed by noted critics, c01umnists 01' other reviewing media including magazines, newspapers, radio, TV and etc. except in isolated instances.

7, Respondents seldom, and then only in virtually unique situations, offer and enter into contracts or agreements with authors of manuscripts whether deter'Jined by them to have unusual possibilities of success or for any other reason, \vhcreby respondents agree to assume all or a portion of the publication, promotion and distribution costs and to compensate the author on the basis of the number of books sold.

Therefore, the statements and representations, as set forth in Paragraphs Four and Five hereof, were, and are, false, misleading and deceptive.

PAR. 7. In the conduct of their business, at all times mentioned herein, respondents have been in substantial competition, in commerce, with corporations, films and individuals in the sale of services and books of the same general kind and nature as that sold by respondents.

Decision and Order 70 F.

PAR. 8. The use by respondents of the aforesaid false, misleading and deceptive statements, representations and practices has had, and now has the tendency and capacity to mislead members of the purchasing public into the elToneous and mistaken belief that said statements and representations were and are true and into the purchase of substantial quantities of respondents ' services and products by reason of said elToneous and mistaken belief.

PAR. 9. The aforesaid acts and practices of respondents, as herein alleged, were and are al1 to the prejudice and injury of the public and of l'€sponctents' competitors and constituted, and now constitute, unfair methods of competition in commerce and unfair and deceptive acts and pntctices in commerce, in violation of Section 5 of the Federal Trade Commission Act. DECISION AND ORDER The Federal Trade Commission having initiated an investigation of c€ltain acts and practices of the respondents named in the caption hereof, and the respondents having been fU1'ished thereafter wlth a copy of a draft of complaint which the Bureau of Deceptive Practices proposed to present to the Commission for its consideration and which, if issued by the Commission, would charg-c respondents with violation of the Federal Trade Commission Act; and The respondents and counsel for ihe Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of an the jurisdictional facts set forth in the aforesaid draft of complaint, a statcment that the signing of said agreement is fol' settlement purposes only and clocs not constitute an admission by the respondents that the law has been violated as al1egcd in sllch complaint, and waivers and provisions as required by the Commission s rnles; and The Commission, having reason to believe that tbe respondents have violated the Federal Trade Commission Act, and having determined that complaint should issue stating its charges in that respect, hereby issues its complaint, accepts said agreement makes the following jurisdictional fmdings, and enters the following order:

1. Respondent Pageant Press, Inc. , is a corporation existing and doing business under and by virtue of the Jaws of the State of New York, with its principal offce and place of business located at 101 Fifth Avenue, in the city of New York, State of New York. PAGEANT PRESS , INC. , ET AL. 727 722 Decision and Order Respondent Simon A. Halpern is an offcer of said corporation and his address is the same as that of the said corporation. 2. The Federal Trade Commission has jurisdicition of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORD ER It is ordered That respondents Pageant Press, Inc., a corporation, and its offcers, and Simon A. Halpern, individual1ly and as an offcer of said corporation, and respondents' agents, representatives and employees, directly or through any corporate or other device, in connection with the solicitation of contracts for the publication of books or other printed matter for authors and prospective authors and in the promotion, sale, or distribution of books of authors who have engaged respondents' services, in commerce, as IIcornmerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing, directly or by implication;

1. That under their plan of publication the contracting authors wil recover an or substantially a1l of their entire investment in the publication of their books: PTovided, however That it shall be a defense in any enforcement proceeding instituted hereunder for the respondents to establish that any represented number or proportion of authors have recovered the represented portion or amount of their investment. 2. Misrepresenting, in any manner, the amount of return on investment, profits or gains derived or which may be nerived by persons who have engaged respondents' services. 3. That books or other printed matter published by respondents are purchased in large numbers or quantities in the regular course of business by bookstores, department stores wholesalers, libraries, colleges and universities; or rnisrepresenting, in any manner, the kind or number of purchasers of said books or the number of such books purchased by such organizations or others.

4. That the contracting author s book will be nationally advertised; or misrepresenting in any manner, the kind, manner or extent of the advertising, publicizing or promoting accorded said books or other printed matter. 5, That their advertising, publicity, or sales promotion campaign assures success of the sale or distribution of books or other printed matter published by them. Syllabus 70 F. T.

6. That they print or bind a1l or a portion of the copies listed in the contract of the first edition of an author s book: Provided, however That it shall he a defense in any enforcement proceeding instituted hereunder for respondents to establish that said books are printed or bound as represented. 7. That books published by respondents are reviewed by critics or columnists, or in newspapers, magazines, radio or other reviewing media: P,-ovided, however That it shall be a defense in any enforcement proceeding instituted hereunder to establish that the said books have been reviewed as represented.

8. That respondents offer and enter into contracts or agreements with authors of manuscripts, whether or not determined by them to have unusual possibilities of success or for any other reason, \vhereby respondents agree to assume a1l or a portion of the publication, promotion or distribution costs or to compensate the author on the basis of the number of books sold: Provided, h01vever That it shall be a defense in any enforcement proceeding instituted hereunder for respondents to establish that they make such offers and enter into contracts or agreements as represented and that a bona fide effort is made to make such offers and enter into such contracts with each of the authors responding to such advertising representations.

It is fu,-ther ordered That the respondents herein shall, within sixty (60) days after service upon them of this order, file with the Commission a report in writing setting forth in detail the manner and form in which they have complied with this order.