Book Wars

In many ways, Barnes & Noble's re-arrival in this Pittsburgh can be seen as a local skirmish in an ongoing struggle that is dramatically changing the book industry. Location, as they say in real estate, is the key, and the new store's address -- as is true in many cities -- is less than half a block from the popular Borders Bookstore, is a clear battle cry in what's become a war of the superstores.All across the country, the four major book chains -- Barnes & Noble (which also owns B. Dalton), Borders (owner of Waldenbooks), Crown and the Alabama-based Books-A-Million -- have been on a building binge focused on what have come to be called superstores. With 10 times the square footage and six times the number of titles as conventional bookstores, as well as such trendy amenities as in-house coffee bars, there are now 800 of them in operation. In 1996 alone, 190 superstores opened their doors, many of them across the street or down the road from their competitors. And industry observers expect the growth frenzy to continue until there are 1500 superstores -- double the number that exists today.Already a subject of speculation is which of the chains will be left standing after the construction dust clears. But an even greater concern is how many independently owned bookstores -- unable to compete with the chains' discounts and big advertising budgets -- will be squeezed out of business by the aggressive expansion. "If they haven't got a better use for their capital, and Barnes & Noble wants to go head-to-head with Borders, that's fine," says Peter Givler, executive director of the Association of American University Presses. "But in that kind of war between the elephants, the little guys are going to get trampled on." (According to the American Bookseller's Association, more than 250 independent stores have closed in the last four years. Nearly all of them cited the superstores as a factor.)To some observers of the chains' growing influence over what gets published and promoted and the volatile publishing industry's rapid consolidation, the demise of the independents is much more than just a mildly unfortunate side effect of the free market. "It's not like Home Depot wiping out all the Mom and Pop hardware stores," says Publishers Weekly business editor James Milliot. "One hammer is the same as another hammer. That's not true with books. The problem for me and a lot of other people in the industry is the danger that we could end up leaving decisions about book buying -- about what people can read -- to just a handful of people."Ask Barnes & Noble about its strategy here, about the rationale behind positioning one of its superstores a mere 30 yards away from its competitor, Borders, and you get chirpy corporatespeak: "We face competition in every market we're in," says Barnes & Noble spokeswoman Lisa Herling. While both Borders and Barnes & Noble boast of increasing sales, that growth has largely come out of the hides of independents. The fact is, sales of adult hardcover books have posted only modest growth in recent years. Last year, adult hardcover sales fell 4.4 percent, and while revenues increased slightly for paperbacks, the number of books sold actually declined. So far this year, net sales for adult trade books have dipped more than 12 percent. For fiscal year 1996, the four biggest book chains reported combined operating losses of $217 million. Yet superstores are growing like a fungus. They're even moving into markets so small, they'd once been thought of as immune to the phenomenon. Omaha; Fargo; Boise; Greenville, South Carolina; and Santa Rosa, California, all now boast at least two superstores. Columbia, South Carolina, and Gainesville, Florida, each have three, and High Point, North Carolina, has a preposterous five superstores."They're not booksellers, they're conglomerates waging a turf war with mass merchandise," says independent bookseller Larry Robin about the chains and their superstore frenzy. "But books are different than almost anything else. They're not merchandise. You're dealing with history and the voice of literature. I think books are really important to the way a society functions. Not only do they capture our history, they capture our desires."As a founder and director of the New Atlantic Independent Booksellers Association, a regional trade association, Robin, who owns two Center City Robin's Bookstores, has heard plenty of members' war stories about the encroaching superstores. And Robin himself has felt the effects. His second store, on the 1800 block of Chestnut Street, was almost driven out of business by the arrival of Borders. Instead of closing completely, he turned it into a outlet for low-priced "remaindered" books and back-date magazines.In his bushy gray beard, glasses and denim shirt and jeans, Robin, a third-generation book dealer who lives with his family above his 13th Street store, is a dead ringer for Jerry Garcia. Like many independents Robin has survived by staking out particular niches in the market. He parlayed an interest in poetry into the best poetry selection in town. He began promoting African-American literature years before the book industry mainstream recognized there was an avid audience for it. And more than 15 years ago, Robin began experimenting with in-store readings by authors."People say, Oh, you have readings like Borders. But Borders has readings because we made it work," says Robin, who remembers a time 20 years ago when there were close to two dozen general-interest independent bookstores in Center City."The chains aren't interested in books; they're not interested in literacy. What they're interested in is market control," says Robin, who maintains he's not overly concerned about the Barnes & Noble opening. "It won't hurt us. Borders already took what they're going to take. What's starting to happen is, they're not only cannibalizing each other but themselves as well."In fact, Barnes & Noble has been putting millions into going up against Amazon.com, the astonishingly successful online bookseller that took the industry by surprise two years ago. Borders, too, has an online sales site in the works. "The whole picture is very confusing," says the American Association of University Presses' Peter Givler. "There appears to be this tremendously unprofitable investment in bricks-and-mortar bookstores at the same time there is this tremendous competition on the Internet. Where do they think all those readers are going to come from?"Says Jan Nathan, head of the Publishers Marketing Association, a trade organization for small presses, "Superstores have made more books available to the same amount of buyers. Twenty-five percent of Americans are illiterate and 25 percent are marginally literate, and only 20 percent of the remaining 50 percent buy books."While the superstores battle it out for slivers of a moribund market, the independents are finding it harder and harder to get a break. The American Booksellers Association was even moved to file antitrust suits against six major publishers for their secretive preferential policies regarding the chains. At issue were the bigger discounts awarded the superstores in return for their mega orders, and exclusive deals that allowed big boys like Barnes & Noble to rake in hefty "advertising" fees from publishers for featuring their books in store windows, at the cashier's counter or in special displays. While the publishers admitted no wrongdoing, they settled the ABA suit out of court and agreed to disclose pricing and advertising policies to all of their customers.But publishers are snubbing the independents in favor of the chains in other ways. HarperCollins recently sent out a letter informing booksellers it would not open new accounts with less than a $25,000 order, and Macmillan has announced it will no longer deal with booksellers that don't order at least $15,000 worth of books each year -- huge amounts for small independents. While the publishers maintain that book dealers who don't meet the criteria can still order through wholesalers, Larry Robin says the wholesalers don't carry a publisher's entire list. "For the first time in history, I could be in a position where I can't get a particular book for a customer."The most recent bombshell to hit was a front-page New York Times article, published last month, that disclosed just how much influence Barnes & Noble has over publishers. Grove Press, for example, sought the chain's opinion on whether to publish a book by pop song writer Jerry Leiber. (B&N gave it a thumbs-down.) Random House redesigned the cover of Mario Puzo's latest novel, changed the title of a book by British author Melvin Bragg and turned down a first novel from another Brit -- all on the advice of B&N buyers, according to the article. "Barnes & Noble and Borders have an increasing presence, so we really must spend more time with them to get our books across to a wider audience," explained a Grove Press editor matter of factly. Good business sense or scary trend? As the article went on to illustrate, the book industry is deeply divided on the question.But perhaps the biggest controversy to swirl around the superstores is the issue of what are called returns. One of the dirty little secrets of the book biz is that while all those new store shelves may look impressively full, an estimated 45 percent of books ordered are returned to publishers. In a custom begun during the Depression and unlike any other in retailing, if booksellers return books by a certain date, they don't have to pay for them. Crushing levels of returns have prompted a spate of accusations between the chains and publishing houses and an industry task force to study the problem. Publishers say the chains demand big publishing runs for predicted blockbusters and when they fail to hit quickly, send them back. (Major big-budget flops of last year included memoirs by Johnnie Cochran, Jay Leno and disgraced political advisor Dick Morris.) The chains counter that it's the publishers' outlandishly large advances for some books that are whipsawing the industry, and that they have to order big, because if a book takes off they can't afford the delay it would take to get it back in stock.Yet the problem isn't just limited to overhyped celebrity tell-alls. The AAUP's Peter Givler says many of his university press members are also reeling from returns. "At first, with the superstores, there was what looked to everyone like this wonderful surge of ordering. But then over the last 18 months or so a lot of those books that went out came back." A recent report from the Book Industry Study Group said that "books now have a shelf life somewhere between radicchio and active culture yogurt."And while stores like the popular Center City Borders does boast some relatively obscure writers in its literature section, the chains, with corporate shareholders to answer to and computerized inventory tracking systems to guage sales power, are ultimately not in the business to stock books out of the sheer love of literature. "It's clear they cater to what sells, to what's popular," says Michael Fox of Joseph Fox Bookstore on Sansom Street, who took a hit with the arrival of Borders here seven years ago. He says he's adjusted to the market by upping his level of service ("We'll even find out-of-print books for you.") and by launching his own roving reading series. Says Fox, "If there were only chain bookstores, a lot of books wouldn't get published, a lot of books wouldn't get written, and a lot of books that have been published would disappear from the shelves." Says Robin, "What will it mean when there are five publishers, two distributors and four chains? You have this whole series of questions of how writers develop in this kind of environment and about the availability of ideas. If everything must be market-driven, will it only be valid to publish what's marketable? Could Tom Paine's Crisis Papers get published today?"

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