NORTHERN CALIFORNIA INDEPENDENT BOOKSELLERS ASSOCIATION

HOLT UNCENSORED #116
by Pat Holt

Friday, December 17, 1999:

BRAVO, INDEPENDENTS
THAT BOOK CLUB MERGER
ACQUISITION-HAPPY B&N

LETTERS

BRAVO, INDEPENDENTS

What an inspiring week it's been: On Monday, the eve of the historic third meeting of the congressional Advisory Commission on Electronic Commerce in San Francisco, who should call a press conference but a group of independent booksellers who lined up at the front desk of A Clean Well Lighted Place for Books and explained why

1) Internet sales should be taxed in the same way they're taxed in bricks-and-mortar stores, and

2) the billions of tax dollars presently lost from state revenues constitute a CURRENT violation of existing tax law that is important to EVERYONE right now.

The media in turn opened the door to public discussion, thus making the Commission's central issue - should the Intenet be a tax-free zone? - one of those career building/wrecking issues that will place more than one political candidate in the hot seat next year.

The booksellers joined with other independent retailers as well as a few chains (Wal-Mart for one) to form a coalition called e-Fairness. While the group faced an uphill battle with the Commission, where only one proposal out of six on Tuesday advocated Internet taxation, it appears to have a better shot convincing state boards of equalization (BOEs) to enforce existing laws.

The booksellers and their coalition want BOEs to investigate a 1992 Supreme Court decision that requires merchants to collect sales tax in states where they have a physical presence, or "nexus."

Contending that Barnesandnoble.com and Borders.com. have nexus in California because of their own bricks-and-mortar stores (gad, what could be simpler - you can return a book you bought online from either of these chains to their ON EARTH stores!), the booksellers add that Amazon.com also has nexus because of its many auctions, Z-stores and commission-paid "associates."

The recovered tax money would contribute to schools, roads and public safety and could even "allow the state to lower the sales tax rate," the booksellers said, "which would benefit everyone."

What a great way to put it: Sales taxes are for everyone. This is not the kind of language you hear in a Barnes & Noble or Amazon.com or Borders press release. There the idea of winning the game, whatever it is, doesn't take in the notion that everybody, when it comes to taxes, can win and is supposed to win.

The good news in California is that independent booksellers have been meeting with the State Board of Equalization all along. Last month Bill Petrocelli, a lawyer and co-owner of Book Passage in Corte Madera, submitted two exhaustively researched briefs in which a number of surprising comments pop out to the lay reader. For example:

* "Most independent booksellers would support lifting the sales tax ON BOOKS (my emphasis) altogether," Petrocelli writes. "We believe that books are fundamental to a civilized society and that the state should not discourage reading by placing a tax on the purchase of books." Imagine! Books are as important as food! This has always been a great idea and should be resurrected.

* Even Amazon.com founder Jeff Bezos concedes that he picked Washington as the company's home base to AVOID collecting sales tax: "[Amazon.com] had to be in a small state," he is quoted in the online magazine Fast Company. "In the mail-order business, you have to charge sales tax to customers who live in any state where you have a business presence. It made no sense for us to be in California or New York."

* If you think the case against Amazon.com is flimsy because the company doesn't have official sales agents in California, consider the case of Scholastic Book Clubs v. Board of Equalization, says Petrocelli. Here "the vendor attempted to sell books to students by mailing soliciation material to teachers," many of whom the company didn't even know by name.

"Scholastic Press contended that these teachers were not its 'agents' . . . because they were under no duty to solicit sales. The court rejected that contention," says Petrocelli. Its decision: "The teachers . . . are obviously acting under appellant's authority, and certainly as appellant's agents or representativies." By the way, Barnesandnoble.com has at least 12,000 sales affiliates in California, while Amazon.com has at least 35,000.

* The numbers are already huge. California's portion of Amazon.com's estimated 1999 sales is $150,000,000, Petrocelli believes, certainly enough to motivate the State Board of Equalization to launch an investigation, and maybe that would inspire other BOEs to follow.

This topic has certainly become as important as Barnes & Noble's attempted acquisition of Ingram, a proposal that was nixed by the Federal Trade Commission in large part because of an overwhelming public outcry.

There is no doubt that when readers know what's at stake in "the bookstore wars," they get it, they feel motivated by it and they do something about it. Let's hope this is another of those occasions.

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THAT BOOK CLUB MERGER

Perhaps any announcement about once-respected book clubs such as the Book-of-the-Month Club or Literary Guild is going to hit an exposed nerve these days.

Of course, over the years, the pitch of book clubs got a little gimmicky (GET 6 BOOKS FOR A PENNY AND THE NEXT 300 AT FULL PRICE!), but their mystique remained for a long time.

I remember oil paintings of wondrous and stuffy old libraries where learned book-club directors were shown discussing the great literary works of their day. One could almost hear the thud of weighty decision-making hit the mahogany table as these wise elders, their brows furrowed and pipes a'puffing, chose the best books they could find for eager book club subscribers.

Perhaps it was inevitable, once chain stores and price clubs moved in, that the idea of the "best" literary finds would give way to the most popular books appealing to the largest audience. Then came online bookselling and blam: Book-club growth took a dive and selections from Book-of-the-Month and Literary Guild looked about the same as many bestseller lists in the land.

So perhaps we shouldn't feel much of a pang about the coming "partnership" announced this week between Book-of-the-Month Club (owned by Bertelsmann) and the Literary Guild (owned by Time Inc.).

It's nothing new to see once-fierce literary competitors merging to stay alive. Certainly Bertelsmann and Time are savvy enough about "sharing back-end functions like distribution and warehousing" (says the New York Times) to keep a BOMC/Literary Guild entity putzing around for years.

But we as readers know the consequences. Merging and centralizing and streamlining and fusing of already-large ventures by two huge conglomerates doesn't inspire much confidence in literary leadership or independent thought. It only means that more and more decisions about books are falling into fewer and fewer hands - and these ain't the best hands at choosing good books by a long shot.

As a result, it's really not the "branding" of America that is turning sour at the start of a new century but the "blanding" of every American product made by every American conglomerate with a bureaucracy whose job is to keep things dumbed-down.

The era of general book clubs really ended when you couldn't tell the difference between BOMC and Literary Guild, which was long before Bertelsmann ever got in bed with Time. Unless something fresh and new and real is introduced in the new book-club "package" (intelligent choices of books, for one thing) the merger may face a declining rather than growing membership.

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ACQUISITION-HAPPY B&N

Why, that naughty Barnes & Noble is just expanding every which way and hoping no one will notice.

Recently the company bought nearly half of iUniverse, the online publisher of books; and this week B&N's online division barnesandnoble.com purchased an equity stake of up to 40% of Enews.com, "the largest retailer of magazine subscriptions on the Internet," says Business Wire.

B&N calls this move a "perfect strategic fit," according to b&n.com CEO Jonathan Bulkeley. And he clarifies the point: "Our complementary product lines offer outstanding cross-integration and enhancement of the magazine section of the bn.com site, which in turn will generate stronger commission revenues through magazine sales."

Translation: We get more money and power whenever we slime a vendor.

At the same time, readers might ask B&N, what the heck are you doing buying up a supplier? You're a bookseller with a magazine rack! You need LOTS of pipelines coming in with MANY different kinds of "product" to serve ALL the many disparate tastes and needs that walk into the store.

Why, look, b&n.com wants us to know: Enews sells subscriptions to over 900 magazines, and the lineup at its website http://www.enews.com is pretty varied. Sure, the top 3 sellers are girlie magazines (Playboy, Penthouse, Maxim), but Modern Bride and Guns & Ammo are also prominent, and the range of niche magazines includes everything from The Teddy Bear Review to The Tri-State's Divorce Magazine.

But what happens if I want to buy, say, Shakespeare, Tikkun, Sycamore Review, Ms. or Girlfriend magazines, none of which Enews carries? That doesn't mean Barnes & Noble or barnesandnoble.com or b&n.com or bn.com won't sell 'em, will it? Just because ONE supplier - the one that barnesandnoble.com has bought, the one it favors, the one it's got a stake in - doesn't have the "right" pipeline, surely b&N.com won't expect customers to conform, will it?

Business Wire reports that the Enews investment "is the first of several barnesandnoble.com plans to make and announce in the coming months." What fun to ponder the next and the next and the next.

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LETTERS

Dear Holt Uncensored:

I was glad to see Andy Ross of Cody's on a brief TV news segment on the congressional hearings regarding tax-free internet sales. But then I was caught up short by seeing a congressman shown saying he was against "taxing the internet." I hadn't heard that phrase before, and it almost went by me before I caught the supreme dishonesty of calling the issue "taxing the internet." What a great euphemism that is for defending the practice of what is plain-and-simple tax evasion in internet commerce.

"Taxing the internet" is a perfect example of one of those neat phrases whose purpose, as George Orwell said, is to "defend the indefensible." It's obvious that this tax loophole constitutes an unfair discount that not only discriminates against bricks-and-mortar stores, but further impoverishes strapped state governments. But I'll bet this confusing catch-phrase catches on and is defended by people who buy on-line, because everyone dearly loves to save a buck, even in an ill-considered way that in the long run hurts us all.

Dorothy Bryant

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Dear Holt Uncensored:

Since I compete with Amazon I keep a pretty good eye on them. If you haven't noticed, they seem to have changed their discount policy to squeeze out some more income. Tonight I have checked ten paperback titles and noticed that they aren't discounting 20% any longer. They are now at either 15% or full price. Things were either 20% or 30% off. This is the first time I've run into 15%. I wonder if, like airlines, Barnes and Noble will match them.

It doesn't look like a blanket policy at Amazon but I do see hardcovers going for full price, 30% and 25% off which is a new rate. . . . I noticed several months ago that certain books were no longer being discounted but this is the first time I've seen a middle ground selected . . .

A Reader

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Dear Holt Uncensored:

Re #115: An important point for your letter-writer Steven Piziks: Self-publishing companies are NOT "aka vanity press." There's a legal distinction, to add to the financial and artistic ones. He's right that vanity presses "don't pretend they'll advertise or distribute your book." That's why they can no longer call themselves publishers. The small publishers of my acquaintance who produce books for self-publishing authors -- in whatever quantity -- work very hard advertising and distributing those books, to everyone's benefit. And if the books aren't blockbusters, well, that's why there's a bumper-sticker that says "Real Publishers Have Night Jobs.")

Also: Amen to Better Naked Than Nike, in all its permutations -- but I was surprised to get to the support-independent-bookstores finish (amen to that, too) with no mention of sweatshop PUBLISHING. Could you address that sometime? Are overseas printers/binders more enlightened than their textile industry peers? I'm dismayed to find more and more children's books in particular printed in China and other countries not known for their high standards for workers. (A sad circle -- buying books for our children that are assembled by someone else's children.)

Readers (and publishers!) need information on overseas book production, and this reader-publisher doesn't know where to get it. An agent of one big U.S. "brand-name" printer that uses Asian facilities stopped by my booth at Northwest Bookfest (ironically, to compliment us on one of our union-printed and -bound books that had won a Bookbuilders West award when he was a judge) and talked so long and fervently about how well their workers are treated that I was convinced my concern was justified. (Methought the gentleman did protest ...)

Finally, thank you from someone who didn't know her for your tribute to Faith Sale, who obviously set the standard for editors and human beings in general. That was a moving and inspirational piece. A keeper.

Jackie Pels (small-e editor, small publisher, concerned reader)

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Dear Holt Uncensored:

I have yet to find a proponent of the "new" publishing who will discuss why, if they are such writers' advocates, their contracts transfer ownership of so many of the writers' rights in their work to the publisher.

It's possible that there are new publishers out there that I don't know about who merely produce and market the book, and take an up-front fee with a percentage of the earnings without demanding ownership of the author's intellectual property. I would welcome hearing from such publishers about how they handle the author-publisher relationship. However, I doubt that e-publishers who bad-mouth agents for making money would be upset to have a best-seller on their hands. If they didn't think they could make money in that lottery, they'd simply produce and market the book, and not demand reprint rights, translation rights, display rights, all sorts of options, etc., etc.

By the way, at this agency, we hand-write brief personal evaluations on each rejected manuscript (we get up to 200 a week). The time spent is like paying the rent on a storefront: you don't make money until you get a customer.

Agents have fought for decades to get intellectual property away from publishers who want to take it over and back into the hands of the authors who created it. What we're seeing today is Say's Law of economics beginning to operate in publishing. Rotten contracts signed by eager newbies are going to result in the loss of intellectual property rights by all writers at all publishing houses.

If you charge a fee, keep your hands off the author's property.

That literary agent

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Dear Holt Uncensored:

I am a letterpress and offset printer/book artist. I am self-employed, with aspirations to help publish writers and make books. But I am unable to afford this luxurious feeling much longer due to its expense to me. The fact is, if time is money, I have consistently lost money on the last four books I have printed. I will not settle for printing a sub-standard product, and what the author pays for is a well edited, designed and printed archival document.

I have a lot of distribution know-how, sending my authors' books out into the world, but only the effort of the author renders "getting it out there" a success (Patrice Vecchione's "Territory of Wind" was second only to Pablo Neruda on the poetry bestseller list at Bookshop Santa Cruz and we printed an extremely short run of 800 copies!). I don't make any money off books outside of selling them on my website (My percentage is less than what a bookstore will take, but not many people buy online from me anyway). I am technically the publisher, doing a lot of free consulting about marketing with the author, and more importantly, I supply for free the use of my ISBN and I arrange with the distributors.

I say to everyone who wishes to see their book in print: BEWARE of online publishers, or publishers who require money and THEN make up a contract that is similar IN ANY WAY to a mainstream publisher: where the author gets royalties or a percentage of each book sold and/or signs away their editing rights. I have two contracts: one for the printing project itself and one for my website sales. I only own my design: ie, they can't take my formatting and get it reprinted someplace else without my permission. The author owns the edition I printed and the copyright, of course.

I must do commercial job printing to survive financially, although I wish it wasn't so.

Kate Hitt
Many Names Press

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Dear Holt Uncensored:

I really take offense at the "scams all" reference to small press publishers. I learned how to publish about ten years ago when I was teaching a writing class at a retirement home. No one, but no one, would publish the books some of those seniors were writing. And some of those books were excellent. I could not afford to pay royalties, but the authors wanted to see their books in print, whether it cost them something or not.

I have now published over 40 books. Some have sold well; some have not. The authors and I discuss this problem from the beginning. I do everything I can to sell their books. If they don't sell, then the authors understand this. But you should see the faces of these authors when they see their books in print. All it takes for a small press publisher to become credible is to be open and honest with the author.

I promise them only a well-published book, one they can be proud of. And I promise them I will do whatever I can to market their books. They work at the marketing themselves. These are not just memoir books for their families but historical autobiographies and biographies, some of which should be on library bookshelves, in school libraries, in bookstores for all to read. Don't dump on small vanity presses until you've been there and talked with good authors and honest publishers. Not all of us scam people!

A publisher