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Algora Publishing - The Non-Independent Publishing Industry
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The Non-Independent Publishing Industry
Publishers Weekly, June 11, 2000 Wall Street Journal, June 9, 2000 B&N's Cutback on Bestseller List

In a move that may delight independent booksellers and irk publishers, Barnes and Noble is reducing the number of titles on its fiction and non-fiction hardcover bestseller list from 15 to10. Currently, B&N discounts 40% off the titles on its hardcover fiction and non-fiction list and 30% off the 20 titles on its paperback bestseller list. Last fall, B&N stopped offering a discount on books on the New York Times bestseller list and created their own bestseller list.

An anonymous (of course) company spokeswoman is quoted in today's Wall Street Journal saying that about 90% of its sales from its bestseller lists comes from the top 10 listings. Trimming the list means B&N not only doesn't have to offer discounts on 10 additional titles in each store, but they also don't have to stock those titles as heavily as they would if featured on a front-of-the-store bestseller list. For independent bookstores in their area, B&N's step down in discounting could signal the fact that one of their fiercest competitors may not have bottomless pockets.

 Several bookstores contacted by PW Daily wondered how B&N had been able to offer such steep discounts on so many titles for so long. "What's the phrase?" asked Emoke B'Racz of Malaprop's Bookstore, Asheville, N.C. "'You can't have your cake and eat it to.' It is interesting to see them cutting back. Maybe they feeling like leveling the field for us--that would be nice." As to whether it would change the way customers shopped or thought about discounts, she was less convinced. "I think people who live for discounts will still be that way. People less consumer-crazed make purchases where they want to support and keep their community."

 "I've always felt that once B&N got the full market share and had no competition that they would reduce discounting," Kerry Slattery of Skylight Books, Los Angeles, Calif., told PW Daily. "We never discounted bestsellers. I feel like that's not the reason customers come to us. B&N has done a good job of marketing to make people think that all books can be found cheaper in their stores, when its really not true. We've taken lots of orders for the new Harry Potter book and we're staying open late that night to sell the book after midnight, but we're not discounting the book."

 "You mean they finally want to make some money like the rest of us?" asked Gayle Shanks of Changing Hands, Tempe, Ariz., when told of B&N's tightening of discounts. "There's only so long they could keep giving away the whole store. We've been using the Book Sense bestseller list and its making huge impact on our sales, but I'm not discounting them." –K.H.


The Nation,   July 5, 1999

Random Acts of Consolidation

The government has rarely invoked the antitrust act to prevent the vast concentrations in media power of recent years. Two events in the past few weeks dramatically show the difference it makes when the government acts, and what happens when it doesn't.

First, an avalanche of complaints from independent booksellers and authors about Barnes & Noble's plan to buy the major American book wholesaler, Ingram, resulted in serious objections being raised by the Federal Trade Commission staff. Even though corporations have rarely lost cases of vertical integration, Barnes & Noble, faced with the first major threat of antitrust action in publishing in many years, agreed to abandon its plan.

Second, Random House, which was acquired by the German conglomerate Bertelsmann last year with no government intervention, announced its plans to consolidate several divisions that might have flourished as independent companies under an antitrust ruling. At the time of the purchase, many in publishing thought there would be some antitrust action by the FTC. Even if the merger were allowed, it was assumed that the conglomerate would be asked to surrender some of its vast, overlapping publishers, as has often been the policy in the past. After all, since the new Random House would control 30 percent of American trade books, what need did it have for three similar mass-market arms-Dell, Bantam and Ballantine? Likewise, could it accommodate two similar highbrow paperback lines, Vintage and Anchor? The FTC, however, made no such move.

At the time of the deal, Random House's profit-and-loss figures (which were made public for the first time) showed that it had been surprisingly unprofitable. In spite of efforts by owner S.I. Newhouse Jr. and his surrogate, Alberto Vitale, to concentrate on commercial bestsellers, the firm's profits during its last year of independence were less than one-tenth of I percent, a figure so low that many initially thought the New York Times report contained a typographical error.

Upon announcing its acquisition, Bertelsmann issued a press release saying that it expected Random House to make a 15 percent profit. Assuming Random House sales of more than $1 billion, this meant raising annual profits from $1 million to $150 million. How could this be done? After all, Random House had ruthlessly pursued a policy of obtaining as many bestsellers as possible, and yet before its sale to Bertelsmann, it had ended up writing off $80 million in contracts that would never earn back their advances. (Rupert Murdoch's HarperCollins, following a similar policy, had written off $270 million, a substantial amount even for international conglomerates.) Even if Bertelsmann were to fire half of its new staff (which it hasn't), the savings would come nowhere close to making the announced profit goals.

Indeed, Bertelsmann's reorganization of Random shows the risks involved in downsizing publishing companies. It has already parted company with three of its best-known commercial publishers. Bill Shinker left Broadway Books, Linda Grey left Ballantine and Carole Baron, the head of Dell and editor of such bestselling authors as Danielle Steel, left with a bitterness that was echoed by one of her major authors, Thomas Harris. At the same time, the process of stripping publishing houses of their meaningful identities-as has already happened to Times Books, Pantheon (the firm I ran for several decades) an Random House

holdings in Britain-continues apace. The current imperative is instead to accelerate the search for interchangeable bestsellers. Alfred and Blanche Knopf published books that reflected their tastes and priorities, and their imprints were a guarantee of a certain quality. Now, as BertelsMan Irwyn Applebaum (head of Random House's Bantam and Dell) commented to the New York Times, "the consumer doesn't care whatever imprint is on a book."

This trend can be seen at all the conglomerates. I recently took a careful look at the spring catalogues of three leading commercial firms: HarperCollins, Simon & Schuster and Random House. Their lists all included a number of successful bestsellers, such as NBC news anchor Tom Brokaw's The Greatest Generation, with some 1. 5 million copies in print. (It should be noted that it was the Wall Street Journal, not NBC or Random, that publicly disclosed the fact that NBC owns 25 percent of Brokaw's book. The line between synergy and conflict of interest has been blurred before, but NBC's massive promotion of a book it partially owns raises new questions.) The lists also exhibited an increasing reliance on television and movie tie-ins, seen most dramatically in the launch of HarperEntertainment, which is scheduled to publish 136 books in its first year along the lines of the Jerry Springer Picture Book.

Yet out of a total of more than 400 titles, the three lists include all of four books on current politics. Among these is HarperCollins's collection of the New York Post columns of one of Murdoch's favorite political thinkers, the late Eric Breindel, showing that when it comes to ideological piety, even conglomerate owners are willing to lose the occasional dollar. The most striking feature of the lists, however, is their lacunae. The three firms include not a single work of serious history (exempting the Brokaw book from this category), no work of scientific inquiry and not a single translation.

In a few years, these conglomerates have managed two seemingly contradictory achievements. They have lost unprecedented amounts of money, and they have eliminated from their lists many of the serious and lasting books on which publishing traditionally relied.

Of course, the few remaining independent presses and many of the university presses are doing their best to publish the books that have disappeared from the conglomerate lists. But as the investment of the major publishing houses, which control 80 percent of sales, continues to shift to more commercial fields, the choice of ideas presented to American readers will continue to dwindle. 0

Andre Schiffrin is director of The New Press (www.thenewpress.com).

July 5, 1999