By Hillel Italie
The Associated Press

This should be a great time for the book world. Harry Potter and the Order of the Phoenix has set sales records. Hillary Clinton's memoir, Living History, has sold more than 1 million copies. Other recent successes include Oprah Winfrey's book club pick East of Eden, and Walter Isaacson's Benjamin Franklin.

But instead of celebrating, publishers have been cutting. Scholastic, Inc., the U.S. publisher of the Potter books, announced in May that 400 employees had been fired worldwide and said in mid-July there would be additional cuts. Simon & Schuster, which released both the Clinton and Isaacson books, announced last week that 75 employees would be laid off.

Few ripples

The industry had hoped the Potter boom would carry over to other titles, but most report either modest increases or none at all. Once the boom receded, fundamental problems remained: a slow economy, a distracted public.

"It's harder for books to catch on," says Gary Fisketjon, a longtime editor at Alfred A. Knopf.

"I think the slump probably started in the (2000) presidential election that wouldn't end. And that spring (2001) was the dot.com crash. Then you have Sept. 11 and a constant war footing ever since. People are just preoccupied in all sorts of ways."

Discounts hurt

Big sales don't necessarily mean big profits, especially if everyone is expecting a hit. With Clinton receiving an $8 million advance, Simon & Schuster needed hundreds of thousands of sales to make money on the book. And Amazon.com, anticipating tremendous competition for the Potter book, offered a 40 percent discount on the $29.99 suggested price. The result: Despite more than 1 million sales worldwide, the online retailer announced it essentially broke even with Order of the Phoenix.

With more than 100,000 titles annually released in the United States, the industry doesn't sustain itself on high-profile books alone. It also needs steady sales of older titles and surprise hits like Alice Sebold's million-selling novel, The Lovely Bones.

Sebold's book, published a year ago, was the literary event of 2002 and cost a fraction of the Clinton book to produce. But more than halfway into 2003, no new literary novel has had significant impact.

"I don't think there has been a book this year that really took the world by storm," says Jonathan Galassi, president of Farrar, Straus & Giroux. "That's what it takes, something that lights people up."

While sales should be strong for the memoirs of former Secretary of State Madeline Albright and Toni Morrison's new novel, Love, no fall releases are likely to sell in numbers approaching Potter.