HOLT UNCENSORED #104
by Pat Holt
Tuesday, November 2, 1999:
THANK YOU, INDIES, #632
THANK YOU, INDIES, #632
It's gratifying to note (once again) that this column is less about "saving" independent bookstores than about the way independents are saving the things we all value - such as:
1) good books that would otherwise fall through the book industry cracks;
2) neighborhoods that would otherwise be Starbucked, Targeted and Bordered to death; and
3) schools, police and fire departments and many health and human services throughout most states in the nation.
If you think #3 is going a bit overboard, take a look at the fundamental question that's raging around the matter of sales tax on the Internet.
True, a moratorium against new sales tax on the Internet is in place for another two years; and yes, chain stores with websites like Barnes & Noble and Borders and online book outlets like Amazon.com are dancing around the notion of "nexus" (we'll get to it in a minute) as a way of pretending they shouldn't have to pay sales tax on Internet-based sales.
But all of that is a just a distraction from the fact that many states are losing hundreds of millions of dollars in sales tax money that should be supporting essential services, and the ONLY ONES who are standing up against this loss, with signs in their windows and flyers given out to customers and meetings with State Boards of Equalization are independent booksellers.
And OF COURSE they have an ax to grind! Because independent booksellers pay sales tax on each and every purchase we buy from their stores, OF COURSE they think we oughta pay sales tax on the same purchases if we buy them on the Internet.
Obviously it's not fair that one bookseller pays sales tax and another bookseller doesn't. But it's ALSO NOT RIGHT to rob our schools, fire and police department and various health services - and rob them we do: In the book industry, sales are flat rather than increasing, so we're not talking about new or found money going by the wayside. What we're seeing is a SHIFT in sales from bookstores to the Internet, which means that states are losing money they once collected.
How much are they losing? According to Bookselling This Week, "the U.S. Department of Commerce estimates that there were more than $9 billion in online sales last year, and projects online spending will reach $30 billion by 2000, and an astonishing $300 billion by 2002! According to the National Governors' Association, the states stand to lose $15 billion to $20 billion a year in sales taxes they would otherwise have collected."
Oh, but many "E-tailers" complain, charging sales tax will be too complicated! Not only will sellers have to look up the current sales tax for each product from a list of each and every county of every state in the union, they'll have to figure out whom to send the money to, and how and when.
Well, thanks to the National Governors Association, a simple and uniform tax system may soon be underway for all Internet sales. And let's remember what computer technology does best: No matter how complicated the many cities, counties and states can make sales tax, a constantly updated software program could make it exquisitely simple for E-tailers to assess and pay sales tax electronically.
I used to think the sales tax question would surely turn around in two years, when the moratorium on Internet sales tax would be dropped. But every consarn federal commission or blue-ribbon panel or conference of leaders on the subject has drawn its "experts" from Silicon Valley and Internet companies - and whaddya know: The "answer" we keep hearing is this:
The Internet is too delicate for sales tax! You'll drive people way if you make 'em pay sales tax in cyberspace! That's great logic, isn't it? And where will customers go if they're chased off by sales taxes on the Internet? Back to brick-and-mortar stores that are required to charge sales tax? Let's look at it the other way: When everybody charges sales tax (in states that charge sales tax), customers will pay sales tax as they do now, without complaint.
But we don't have to wait until the moratorium runs out to do something about sales tax, because the question of "nexus" is a big bugaboo that can be attacked right now. "Nexus" basically means a cyberspace-to-Earth connection, and friends, when it comes to Borders.com and Barnesandnoble.com, these two online stores, which are spinoffs from their brick-and-mortar stores, have got "nexus" up the wazoo.
The American Booksellers Association is in the midst of proving this by asking independent booksellers to purchase books from Borders.com and Barnesandnoble.com and then attempt to return these purchases to the chains' brick-and-mortar stores in the 50 states. Not all the information is in, but so far, in three-quarters of the states reporting, the chains' physical stores have accepted the returned books - all bought at Internet outlets - for full credit or cash.
As to Amazon.com, another facet of "nexus" is this: If you are an Internet company with a commissioned sales representative selling the product or service for you on Earth, all your in-state sales are subject to tax. So here comes Amazon.com with its program of "Associates" - individuals, groups and companies representing Amazon.com and receiving commissions on sales they initiate.
"Can anyone really distinguish between an Amazon Associate (of which there are about 35,000 in California) and a commissioned salesman?" asks Bill Petrocelli of Book Passage in Corte Madera CA. He's a good one to ask that question, and so are Andy Ross of Cody's, Amy Thomas of Pegasus, Neil Coonerty of Bookshop Santa Cruz and Hut Landon, executive director of the Northern California Independent Booksellers Association. These booksellers are currently meeting with the State Board of Equalization in California to see if something can be done about lost sales taxes in a state that certainly needs every penny to support its schools, police and fire departments and other services.
As Landon says, "We need to take this issue beyond booksellers. It's a community issue because it's a fight to save our communities." Landon is not the only one to draw the obvious conclusion: "If a sales tax does not get charged on the Internet, your property taxes or some other tax you already pay is going to go up," he says. "The money has got to come from somewhere. The state is not going to keep losing it without making some attempt to fill in the gap."
The problem is that the Internet is sexy and sales tax isn't. Or perhaps one should say, the Internet has powerful allies and the sales tax issue needs the kind of grass-roots citizen outcry that hit the Federal Trade Commission between the eyes when Barnes & Noble tried to buy Ingram Book Company.
So far, the ABA has sent out a Sales Tax Action Kit with press releases, postcards and model letters for booksellers to alert customers and spread the word. And here's something general readers can do right now: Take a look at the following letter, written by ABA president Richard Howarth to his state's governor, and see how you can lift it, personalize it and send it off to your own governor.
Safe to say, nobody's as good at spreading word-of-mouth than readers of books, and this is an issue that needs the word spread. It's not an exaggeration to say the health of our communities is very much at stake.
I am writing in support of the resolution that the National Governors Association has passed to pursue e-commerce state taxing solutions and to discuss this issue as it pertains to independent booksellers across the country. This issue is of deep concern to the American Booksellers Association, which represents 3,400 bricks-and-mortar independent bookstores across the country, many of whom also conduct business on the web.
The moratorium that Congress has placed on new Internet taxation, and the failure to collect taxes from e-commerce sites which under current laws should be paying them and are not, are costing local communities tens of millions of dollars per year, and hurting our states and communities in many ways. By not paying sales tax, e-commerce companies can compete unfairly against community-based businesses. Consequently, more shoppers are driven online because of the unfair price advantage, and stores lose business, reducing their payments of sales tax and resulting in major losses for the stores and their communities.
Amazon.com has had a dramatic and negative effect on independent, bricks and mortar bookstores. It is heavily subsidized by the stock market which has permitted it to discount heavily and suffer huge losses in order to beat competition. Amazon.com is being helped to compete unfairly against local businesses because it is not forced to collect sales tax in most states. Amazon.com is evading collecting sales tax in its largest market, California, by building a warehouse in Nevada to service this market. While Amazon.com has no physical stores, we would argue that substantial nexus could still be shown by virtue of its Associate Member Program. This includes many e-commerce sites with national locations, such as California Pizza Kitchen and Key Bank, as well as several national magazines and organizations. This is costing states, communities and local businesses a great deal of money -- money that should be used to bolster and support our communities.
This is not only damaging but may very well be illegal when it involves e-commerce sites affiliated with bookstore chains, such as barnesandnoble.com and Borders.com. We realize that in order to require an out-of-state Internet bookseller to pay sales tax, the state must be able to demonstrate that the seller has a physical presence in the taxing state and that there is a substantial nexus between the seller's activities and the state. There is substantial proof that there are very strong connections between Barnes & Noble's and Borders' e-commerce and physical sites, though they may operate as separate corporations. These activities include, but are not limited to: accepting returns at the physical store for a .com purchase; advertising their e-commerce sites in the store on banners, posters, bookmarks, brochures, sales receipts, and coasters; and plans (from Borders) to put kiosks in all of their stores that link to their website for customers to use within the next several months.
These matters are of grave concern to our members, and we urge you to give them your serious and timely consideration, as it is our communities which are at stake. The American Booksellers Association offers its full support and would be pleased to work with you in any capacity that you find appropriate. Thank you for your time and consideration.
American Booksellers Association
Dear Holt Uncensored:
Can I put in my two cents about author events? I'm a lifelong book lover, and have probably attended more author events than anyone you know because of my job, but if it weren't for my job, I don't think I'd go out of my way to get a book autographed, never have cared about that, because for me - well, what I get from a book is kind of a private thing. But after 15 years of schlepping authors to probably thousands of bookstore events, I've noticed two things about popular authors and the crowds that come out to see them:
- People love to be read to.
- People love to have even two seconds of genuine contact with someone they admire.
The authors who are most successful at these events are the ones who know how to play that game. Brief eye-contact-smile while signing, don't hold up the line, on to the next. The ones who get into trouble are the ones who don't make eye contact at all and are obviously having a rough time being there, or the ones who take too long with individual fans. (Of course it helps to have a clever media escort along to keep things rolling, and a "rescue me" signal with that escort if someone turns out to be crazy, inappropriate, or otherwise time consuming.) It also helps to have a short name, which is one of the reasons so many authors envy Amy Tan.
Kathi Kamen Goldmark
Dear Holt Uncensored:
Your reference to author celebrity and signings called to mind two very disparate events in my career as an author. When my first book came out in 1983, published by Empire Books, a house that expired before they could sell mass market rights to any of their half dozen titles, I went on an El Cheapo tour. That is, the publisher paid my low low budget airfare (remember People's Express?) and a few taxis, and I slept on the sofas and living room floors of friends and acquaintences. The book hit the stores in October, but it was January before I was sent around to spar with East Coast broadcasting personalities. I was in my third city before I realized that whatever books had once been in stores had already been returned.
Nevertheless, I was booked, so I went on. In Washington DC I went on a midday TV talk show, following a spirited discussion among three well-known pundits. As I left the station, one of these fellows was on the sidewalk, signing autographs in a thong of maybe 50 fans. When I opened the door, several people rushed over to me, demanding my autograph. "You want my autograph? MY AUTOGRAPH? Why?" I said. "I'm just a first-time author with a book that nobody can find -- why do you want MY autograph?"
"Enjoy your fame while you have it," said the other fellow, whose name was Pat Buchanan. "Maybe you'll write another book and someone will buy it because they met you. Or maybe you'll run for President some day."
Contrast that with my Russell Means tour. I wrote his memoir, "Where White Men Fear To Tread," and when the 10-city media tour that St. Martins sent him on failed to produce a shockwave of sales, I put together another sort of tour. I got on the phone and used the fax and set up 22 book store signings in 12 days. We drove up the California coast from Los Angeles, stopping in towns along the way until we got to the Bay area, then swung north to Sacramento and returned via the San Joaquin Valley. The biggest turnout was at the Book Cafe in Capitola, a suburb of Santa Cruz, where over 800 people, by my own count, crammed shoulder-to-shoulder into a modest store, and every one of the 100 books ordered for the event was sold three hours before our scheduled arrival. Russell was the main draw, of course, but I always introduced him. He usually spoke for half an hour or more. Once, in Corte Madera, when the book store owner, concerned about people leaving without a book, interrupted him and said that people were anxious to get books signed, he said "I have not finished," and went on for more than another hour, never repeating himself. Few, if any, of the hundreds of people jammed into the store left, and we sold out again.
What made this tour especially memorable is that when we started out, Russell had nine children, including an adopted son, but when when we returned to Los Angeles he had 12. That's right, in three different California towns, three young people individually presented themselves at book signings, each claiming to be his son or daughter! After long conversations regarding their mothers, Russell acknowledged his paternity in each case. We went on to another 40 book stores in other states, and when we had finished Russell had 15 children!
Marvin J. Wolf
Dear Holt Uncensored:
I was also at J.K. Rowling's Livingston, NJ book signing at Borders, and I've read the letters you've posted about it with interest. I would like the opportunity to clear up a few things. First, I was alerted to the appearance about a month before it took place, by a large sign on the front door of the store. It warned, repeatedly, that most people who attended would not be able to get their books signed, and that there would be other activities going on to still interest children (contests relating to the books, stickers given out, etc.). I realized they must be expecting a huge crowd to have stated that up front.
When the night came, I arrived early and my mouth truly fell open at the sight. The line was being kept outside the store (which they closed for the event) and snaked through the parking lot like a ride at Disney World. Some of the children were dressed like the characters in the books, and all of them were waving their books and chanting "Harry Potter, Harry Potter," and not only for the television cameras. I guess the point I want to make is that Borders did, in fact, warn people against disappointment, and they did try to make it a festive atmosphere. It seemed to me that the kids were really enjoying themselves, bonding with other readers, and just caught up in the excitement of being at an event they had most likely never attended the likes of before.
Sure, things could have been smoother. They could have simply passed out the 800 tickets to the first 800 people on line, a limit which they stated up front were all that were available. They could have asked Ms. Rowling to step outside with a microphone and at least greet the crowd. Perhaps they did. The bottom line is that this Borders is a brand new store. They had never attempted anything like this before, and have surely learned from it. I just don't think it's fair to compare this event to one at an independent like The Poisoned Pen which besides being very used to handling such events, was also made up of a crowd of adults, a very different thing entirely.
I didn't even consider waiting in line to have my book signed, since there were clearly over 800 people in front of me. I'm sure other parents could have made that judgment call as well and avoided disappointment early on. It's also unfair to compare the two authors and their style of relating to their fans. Rowling is obviously new to this, still in shock over it, and admits to being uncomfortable with it. So the combination of a new author and a new bookstore means no one quite knew how to best run the show and I'd like to think they can both be given some leniency.
On a final note, I would just like to point out that the children were chanting "Harry Potter" not "J.K. Rowling."
Dear Holt Uncensored:
Yes - o - Yes. Here in Lake County Illinois, just on the Northern edge of ChicagoLand, where the Links of the Mega Chains usually dominate, we saw a lovely, lively contrast last week, when J.D. Rowlings visited Oak Grove School for a signing sponsored by Crocodile Pie bookstore in Libertyville.
To quote from today's Pioneer Press story, " --- the first person in line curled up in a sleeping bag outside the front door at midnight ... By 10 the next morning, more than 1200 tickets had been distributed. No one was turned away. Crocodile Pie owner Kim White said, 'this has turned into a real community event'."
So, I consider your points proven and enjoyably so.
Dear Holt Uncensored:
It may not be accurate to include astronauts in your and others' lists of people who become famous but "never have to meet with individual fans, hour after hour and city after city, in order to keep their fame" Astronauts speak to businesses all over the world to promote the program. They often spend hours after their presentations talking to people, answering questions and signing whatever is presented to them.
Holt responds:I'm astounded. Do you think they have to sit down for 6-8 hours straight doing this, or is it a courtesy after their talk? I've never heard of astronauts advertised as available to meet and sign autographs for hours and hours.
Dear Holt Uncensored:
Just a thought: Instead of canceling their Amazon.com accounts in protest, would it cause more mischief if people just kept those accounts open and never used them. That is, I'm wondering if, in the cyber scheme of things, the whole house of paperless cards wouldn't come crashing down when it turned out so many of those millions of customers Amazon purports to have were phantoms?
Dear Holt Uncensored:
I have to write to you to correct a misconception. Tower Books should never be associated with the "Killer B's." They are so far from that, it's not funny. Tower has been an independent bookseller in all ways that [apply to] any other independent bookseller. They are structured much more like Stacey's which is owned by Brodart. Yes, they have a large company behind them and that's about it. The bookstores all order directly from publishers at the store level. Each manager and buyer buys what he/she feels will sell in their store. Each is directly involved with their bottom line; they handle returns at the store level;they display what they want, sell what they want and hire who they want . . . .
Former Tower Employee
for 13 years