Why is publishing unprofitable?

It's no secret that American publishers are hurting financially. Cost-cutting is the rule, it seems, at houses large and small. Virtually all industry insiders agree that the US recession might as well be called a depression on publishers' row. But the agreement ends there. Everyone gives a different reason for the problems.

Publishers are fond of citing a decline in literacy; competition from TV, movies, and video entertainment; soaring manufacturing costs and the consequent tripling of retail book prices over the last decade.

Critics of the industry, on the other hand, blame a sharp decline in literary quality; overemphasis on forgettable mass market ''blockbusters''; ''sex-ploitation,'' even in serious fiction; fad books and ''nonbooks.''

In a 1980 New Yorker magazine series reprinted in book form (''The Blockbuster Complex,'' Wesleyan University Press), Thomas Whiteside faulted the conglomerates that were busy snapping up publishing houses during the '60s and ' 70s. They have less interest in producing good books than in turning a fast buck , he argued.

Earlier this year in another volume (''Books: The Culture and Commerce of Publishing,'' Basic Books), three sociologists charged that the influence of accountants has eclipsed the influence of editors at some large houses and has taken its toll on book quality.

Now an industry insider has come along with cogent ideas of his own. Leonard Shatzkin formulated his views in the course of a career that included responsible posts at the Viking Press, Doubleday, and McGraw-Hill. He now works as an independent publishing consultant.

His book, ''In Cold Type: Overcoming the Book Crisis'' (Boston: Houghton Mifflin Company, 397 pp., $17.95), will interest not only publishers, authors, and booksellers, but also general readers who are curious about the publishing world or who are concerned about literary quality.

The real cause of the disastrous economic performance throughout the industry , Mr. Shatzkin insists, is a set of antiquated manufacturing and business ideas and practices - especially those relating to book distribution. Among the points Shatzkin makes in his book:

* In the United States there is only one general bookstore for every 50,000 people; this contrasts to one auto supply store for every 10,000 and one drugstore for every 4,000, according to the most recent count.

* One out of every 3 books in retail stores doesn't sell and is returned to the publisher for credit.

* If you or I look for one of last year's best sellers, we won't be able to find it in the vast majority of bookstores; in fact most books, regardless of their continuing sales potential, are off the store shelves, unadvertised, and for all practical purposes dead within a matter of weeks or months after publication.

* Until recently, mass-market paperback royalties supported the whole ''trade'' publishing industry, which was itself operating at a loss. (By ''trade'' publishing, Mr. Shatzkin is referring to what most readers commonly think of as the entire publishing industry - the companies that produce hard-covers sold in bookstores and known as ''trade'' books; the term excludes publishers of textbooks, professional books, and the paperbacks sold outside bookstores.)

* Today the paperback subsidy for trade publishing is drying up, and this could spell disaster for trade publishers, if they don't make immediate changes.

Shatzkin offers a number of controversial proposals. The most important, he believes, is a plan in which bookstore managers would ask the larger publishers to take over full responsibility for the company's stock in the store. Their representatives would decide which of their books and in what quantities to place in the space allotted, and how often to change the selections. This way, inventory decisions would be better informed and more responsive to demand, he feels, than with a single store manager attempting to control the entire stock.

In a Monitor interview, Mr. Shatzkin elaborated on this argument. ''Any publisher,'' he commented, ''will tell you that, in relation to any trade title he publishes, he's only sold a fraction of what the people out there would buy if they could get to them - if there was a bookstore handy, or if the bookstore that was handy had the book in it, or if, in the confusion of so many books coming out, he could make people aware that the book existed.''

Yet the need for wider distribution is more urgent than ever because of dramatic changes in paperback publishing, which could pull the rug out from under trade publishing, Shatzkin emphasizes. To explain, he goes back to the late '40s and early '50s, when paperbacks first became a force in the marketplace.

''I was with Viking when the first Bantam list was published,'' he recalls. ''I remember the sort of mild interest in what was going to happen. One of the books on that first list was a Viking book - Steinbeck's 'The Grapes of Wrath.' We were pleased that a book which we considered to be a very important American novel was going to get attention. And the income was mildly interesting. There'd be a few more dollars in the till as a result but nothing world-shaking.

''. . . As more and more books were published in paperback and those few dollars grew into thousands and then into hundreds of thousands and then into millions and finally into hundreds of millions, this provided fuel to operate the entire trade publishing business. The level at which the whole industry was operating simply went up.''

Today, the reverse is happening, Shatzkin explains. The paperback publishers are buying rights to fewer and fewer previously published titles. And to make matters worse, the paperback houses have launched into their own original hard-cover publishing ventures. Their hard-covers are in stores alongside the books of those publishers from whom they were buying rights only a few months ago, to produce what Shatzkin calls ''a kind of double whammy, a one-two punch.''

The nature of the business has undergone a fundamental change, he argues, so that the inefficiencies - of distribution largely, but also of selecting and of producing books - are no longer tolerable. ''I think this is what we're seeing today,'' he summarizes, ''a reaction to a situation which is not as well understood by as many publishers as it should be. The reaction is therefore not as carefully thought out as it should be.''

For a detailed and penetrating look inside the publishing industry, read ''In Cold Type.'' The publishing world is reading it, and while the insiders may not agree with everything Shatzkin says, his views are shaking things up. The most recent evidence is an invitation for the author to speak later this month at the national management conference of the Association of American Publishers.