NORTHERN CALIFORNIA INDEPENDENT BOOKSELLERS ASSOCIATION

HOLT UNCENSORED #127
by Pat Holt

book Tuesday, February 8, 2000:

WHO IS KIDDING WHOM?
HOW NORMA DOES IT
BOOKSELLERS ON THE WEB: PART II

LETTERS

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BRINGING BACK MAIN STREET

It's a cold and forbidding night in downtown Berkeley, much like the economic climate outside, as merchants and residents gather at Old City Hall for the kind of panel discussion that is beginning to crop up all over the country.

This one is called "The Future of Main Street: E-Commerce, Corporate Chains and Community Life."

Sponsored by the Berkeley Planning Commission, the meeting starts with a nightmare premise that used to be considered alarmist but now seems a no-brainer.

The premise is this: Our neighborhoods are being crippled right and left by "the chaining/malling/blanding of America," thanks to corporate-owned, absentee-landlord, cookie-cutter formula stores, big-box discounters, category killers and warehouse clubs that have obliterated downtowns and set up "bunker malls" that destroy everything from jobs and product diversity to Freedom of Speech.

And that's just for starters - combine this with the effect of Internet "e-tailers" and we see not only billions of dollars taken out of communities but also hundreds of millions lost in uncollected sales tax, thanks in many cases to an obeisant press and turncoat senators (see "That Heartbreaker, Barbara Boxer" below).

What to do about it? The audience perks up at the characteristic irreverence of Andy Ross of Cody's Books. Only Andy could use the term "fatuous nonsense" to describe Jeff Bezos' claim that the Internet is too delicate to bear the burden of collecting and paying sales tax like its counterparts, brick-and-mortar stores on Earth.

"Ladies and gentlemen," Ross booms loudly into the microphone, "Amazon.com is a 30-billion-dollar business. It doesn't need relief from the requirement to collect sales tax to help it compete against Cody's Books."

Of course, an argument could be made that Amazon.com's intention is to crush the competition and steal that 17 percent of the retail market that independent bookstores continue to share, and one way to do this is to avoid collecting and paying sales tax. This Andy does not flinch from mentioning.

As Bill Petrocelli of Book Passage, the other bookseller on the panel, explains with mounting emotion, an independent bookseller may cut shipping costs as a way to compete against Amazon.com's discounts, but what remains is still an 8 percent advantage on Amazon.com's part, which is "about the percentage brick-and-mortar stores are required to collect in sales tax." No wonder the inequity of the sales tax issue drives independent booksellers nuts.

"It's also a national scandal," Bill adds, that "people earning low incomes pay SIX TIMES as much sales tax as do those in higher income brackets." The reason is that affluent people can afford computers, modems, email addresses and the education to use them, while the poor cannot. What a tragedy, says Bill: The people who use the Internet can afford sales tax but don't pay it; the ones who don't use the Internet because they can't afford to bear the greater burden of sales tax.

How to bring back the Main Street environment of individual stores, each known for its character and independence, and each contributing to the health of its community within the paved-over, cyberfeted environment of the United States in the 21st century?

Richard Walker, a professor of geology at the University of California, points out everything from traffic patterns to high-tech venture capitalists to show why the big "stores on steroids" have been successful and why a financial transactions tax may "restore sanity" on the Internet.

Santa Cruz mayor Keith Sugar joins community activist Charles Robinson to warn residents that real estate dealers and brokers are often "great fear-mongerers" when it comes to using property values as a means of playing one side against the other.

"Remember that downtowns are not revenue agents," Keith says, meaning don't sell out to chain stores just because they can pay higher rents. "It's the downtown EXPERIENCE that gives your town its identity," he adds. To preserve Santa Cruz's downtown character, he explains, the city recently passed an ordinance requiring special use permits for any store over 16,000 square feet - but not before a 25,000-square-foot Borders slithered in down the block from Bookshop Santa Cruz. "We lost the battle there," said the mayor. "I decided to give up reading."

But there is hope organized, practical, sophisticated, tough-minded and enlightened support on the retail front, reports Stacy Mitchell of the Institute for Local Self-Reliance ( http://www.ilsr.org ) .

"Trends are not destiny," she says encouragingly: Throughout the country, communities are resisting what she calls "the chaining of America" through coalitions of independent retailers, environmental groups, neighborhood activists, trade cooperatives, city councils, zoning boards and planning commissions.

Santa Cruz's 16,000-square-foot limit, for example, is called a "size cap," a familiar practice that has been implemented in cities as varied as Skaneateles, New York; Westford, Mass; Roswell, Georgia; Mill Valley, California and many others. Town-spanning groups such as the Cape Cod Commission keep a whole region's big picture in mind as they approve or reject proposals for new construction larger than 10,000 square feet.

Carmel, California was the first "to outlaw formula restaurants" in the mid-1980s, Stacey reports, followed by many towns whose income would have been crippled by "becoming Anyplace USA," as one mayor put it. Citing the now-famous American Bookseller Association's lawsuits against publishers and chain bookstores, Stacey says a number of retail groups (pharmacists, grocers, video stores) are "reviving antitrust" as a means of stopping chain-store intrusion and growth.

Stacey hits us with so many examples of ingenious methods to resist superstore expansion that it feels as though "Main Street" is on its way back all over the nation. For example, in Montana, Texas, Pennsylvania and other states, she says, chain stores are taxed substantially, a measure that removes much of the store's profits from the home corporation.

"In Greenfield Mass., citizens secured a ballot referendum to overturn the town's zoning decision to allow development of a Wal-Mart store," she says. "In Gig Harbor, Washington, 14,000 people signed petitions to halt the arrival of Wal-Mart and hundreds turned out at public hearings to voice their opposition. The giant retailer finally withdrew its plans."

So what could have been a panel discussion where everybody complains and nothing gets done, turns out to be one of many, possibly hundreds, of upbeat town meetings where the gears are oiled up, engines start revving, people feel galvanized, and new meetings (a Main Street Alliance is to be formed February 13 at Cody's 4th Street store) are planned.

Best of all, it turns out Stacey Mitchell has written a book, and what a treasure trove of ideas and resources it is, called "The Home Town Advantage" (Institute for Local Self-Reliance; 101 pages; $14 paperback; buy online at http://www.bookstore.com ). This is a great book to hand out in any grass-roots organization; no one reading it will ever view (or frequent) a big box or chain store the same way again.

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THAT HEARTBREAKER, BARBARA BOXER

"Senator Boxer, we're mad as hell!" protests the Northern California Independent Booksellers Association, and who can blame 'em: Long a supporter of independent retail businesses, California's Senator Boxer recently issued a statement calling for a ban on Internet sales taxes. This means that the same book for which you pay $18 at an independent store will cost $10 on the Internet (if the online seller doesn't have "nexus" or a physical presence in the state, and most of them claim they don't). If that ain't unfair, I don't know what is.

The NCIBA notes in its newsletter (see also http://www.nciba.com ) that Americans understand the sales tax issue and support Earthbound retailers. In a USA Today/CNN/Gallup poss, the question was asked:

"Should people be required to pay the same sales tax for purchase made over the Internet as they would if they had bought the item in person at a local store?"

The response was: YES - 65%, NO- 28%.

"Loss of sales tax revenue is expected to reach a staggering $900 million nationwide by the end of 2001 if e-commerce continues unchecked," writes Hut Landon, NCIBA director. While meetings with California's Board of Equalization have proved frustrating (a lot of Silicon Valley influence has been used to keep Internet companies from charging sales tax), the NCIBA recently hired Lenny Goldberg, a veteran Sacramento lobbyist, who is working with Assemblywomen Carole Migden and Dion Aroner to introduce legislation that will clarify and enforce the law.

"The law ought to be applied equally," says Migden. "If a California retailer collects sales tax, his/her competitor down the street ought to collect sales tax too - regardless of whether the competing retailer engages in e-commerce sales."

And Aroner says it even more plainly: "the law is clear - if you're located in California, you collect sales tax. Forming a .com subsidiary does not relieve you of this obligation."

So why does Boxer say otherwise? Her reasons are threefold: 1) Sales taxes on Internet transactions could endanger the country's technology-driven economic recovery (yes, it's so "delicate" as Andy Ross notes above; even in 1998 the Internet was pulling in $8 BILLION in sales compared to $1 billion in 1997).

2) Sales taxes are collected to defray the cost of providing stores and shops with services such as police, fire, sewer and water; these costs do not apply to sales on the Internet (hey! say the booksellers this ain't not tit for tat - sales taxes pay for services to everybody, not just stores and shops);

3) Most Internet sales require shipping a product to the customer; brick-and-mortar stores don't ship products because they have inventory on the premises, so they can't say that Internet sellers have an unfair cost advantage (you think it balances out? Keep your eye on the ball: In states where sales tax is collected, and California is one of them, all sellers should collect and pay sales tax. If some don't, that's unfair.)

As usual, Andy Ross of Cody's Books is among the first out of the gate with a letter that may inspire infinite variations. Thanks to the Internet, you can copy it, rewrite it, put your name on it and send to Boxer at senator@boxer.senate.gov and her chief of staff at Sam_Chapman@boxer.senate.gov right now:

To: Senator Barbara Boxer
From: Andrew Ross, Cody's Books
Re: Sales Tax on Internet Transactions

Dear Senator Boxer:

I am extremely disappointed with your recent public position advocating a permanent ban against sales and use tax on Internet transactions. Your position is extreme and has even outflanked the right wing of the Republican Party on this issue. In creating an Internet tax-free zone, you betray the interests of community-based businesses, state and local governments who provide needed services, and the public sector workers in law enforcement and education who are already under funded.

You give as a reason for your position that sales tax collection on the Internet could "endanger the country's technology-driven economic recovery." You are confusing business transactions with technology. Sales tax is a tax on purchase of goods, not on technology. Most electronic commerce companies are traditional mail order enterprises. They have warehouses and use common carriers. They are not technology companies.

Furthermore, you are wrong in dismissing main street businesses as irrelevant to the economic recovery. We contribute to this recovery and should not be discriminated against with tax policy. We are absolutely vital to local economies. Not only do we collect sales tax, we also pay property taxes, business license fees, hire and purchase locally. We support local little league teams and pta's. Internet companies do none of this and should not be afforded tax-free status.

You seem to believe that the Internet is like a rare and delicate animal, which needs to be protected by the government from competition. This is manifestly absurd. The Internet is a trillion-dollar business heavily funded by Wall Street and hyped to a frenzy by the media. The Internet is not a delicate animal. The Internet is Godzilla. My largest competitor on the Internet is Amazon.com, a 30-billion dollar business. How can you argue that Amazon.com needs tax protection to help it compete against Cody's Books?

You say that states and local governments impose sales taxes in order to defray the cost of providing stores with services, and that these services are not used by the Internet. You have been a public servant long enough to understand how breathtakingly false this statement is. Sales taxes are used to fund state and local services in all areas. The sales tax is the largest source of revenue for states and the largest source of discretionary revenue for cities. It permits funding of public safety, education, roads, and infrastructure; all of the things that create orderly markets which allow the internet to engage in commerce.

An educated market for Amazon.com's books is created by sales tax revenue used for schools. Similarly for the computers of Dell and Gateway.com. These products are delivered on roads that are financed by the sales tax. A consumer culture cannot exist without public safety which is supported by sales tax revenue. Internet companies should be good corporate citizens and contribute to the communities which they service.

You falsely equate the cost of sales tax with that of shipping and assert that this cancels out the Internet advantage over local business. These are false equivalents. Shipping to one's door is a service. Sales tax is a tax. We deliver goods to California consumers and must pay shipping and collect the tax. This is unfair and discriminatory.

The Internet tax loophole makes the sales tax system, which is already heavily regressive, even more so. It is a tax break for the upper income consumers who are the overwhelming majority of buyers on the Internet. By creating this important tax-free venue, it will create pressure to raise existing sales tax rates even higher. This will create more burdens on lower income consumers and increase the discriminatory impact against community-based businesses.

Chief Justice John Marshall once stated that the power to tax involves the power to destroy. A sales tax exemption for Internet commerce will give an anti-competitive distortion to one group of retailers selling the same products to the same consumers into the same states as another group. Tax policy should be made according to the principle of a level playing field. Consumers should make their choices based on price, availability, service, and convenience. They should not be choosing products based on the desire for tax evasion.

I respectfully request that you schedule a meeting to hear our position. The meeting should include representatives of community-based business, shopping centers, local and state revenue experts, and public sector unions. I would be happy to facilitate such a meeting.

I admire you and have always supported you as a public servant. I believe that you have the integrity to admit that you have made a mistake. In this instance, you most certainly have.

Sincerely,

Andrew Ross
President
Cody's Books, Inc.
2454 Telegraph Ave.
Berkeley, Ca. 94704
aross@codysbooks.com

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LETTERS

Dear Holt Uncensored:

In regard to Louann Miller's letter about independent bookstores and special orders: Since I make a living special-ordering books for customers, I couln't let her remarks go by without comment.

For independent bookstores, large or small, special orders are an everyday occurence. While we do our best to connect books with people, there are a myriad of circumstances that can prevent independents from doing so. For example, publisher-established minimums frequently keep me ordering books. One publisher of religious books would not ship an order to us if it was less than $75.00, another (an educational publisher) would not ship to us unless we ordered at least $500.00 wholesale from them.

A lot of these publishers would rather fulfill one large order to the Amazon.coms and the Borders of the world because it is easier for them to fill a single five hundred book order than to fill five hundred single book orders. Unless the book requested is from one of your regular vendors, it can be very difficult to obtain.

Ms. Miller stated, "If getting the bookstore to place a special order is like pulling teeth as well as being pricier and slower, the customer is likely to turn to the net instead." Very often, publishers will not give discounts for single book orders, or if they do, they are very meager. We can't all be Amazon.com and sell books at a loss. In fact, on certain titles, online retailers will add a surcharge to a book they don't typically carry.

Another thing to consider is that many smaller publishers require prepayment by check, which can delay getting a book. And until somebody gets in touch with the publisher and finds out all of this information (which can be hard to do if they don't provide a phone number in Books In Print, or don't return phone calls), it can be very difficult to convey to a customer exactly how much a book will cost, how long it will take to get the book, or even if you can get it at all.

None of this is news to booksellers. As publishers merge and smaller ones go belly up (not to mention the whole Ingram-Barnes & Noble fiasco of last year) it gets tougher and tougher to make those people-book connections. The illusion of unlimited instant gratification perpetuated by Internet retailers creates unrealistic customer expectations; ones that can be very difficult for most independents to live up to. Contrary to popular belief, there is no level playing field in the book industry.

While I am sure that there are people who react to special order requests with dumb looks or hostility, those of us who make our living by doing this try our best. It can be a very difficult job and I suspect that your reader simply isn't aware of how many hoops need to be jumped through, or, how outright impossible it can be.

Best Regards

Gerard Donaghy
Outside Sales
Powell's Books
Beaverton, Oregon

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Dear Holt Uncensored:

I thought your piece on Norma Montgomery was wonderful and fascinating. Thanks for it. How in the world did you find her?

By the way, you must not be a crossword fan; otherwise you'd know that the creator of Perry Mason was named ERLE Stanley Gardner. (Handy, those words with two E's.)

Not long ago, I saw a perfect copy of a strange book by Mr. Gardner -- about boating and fishing on the San Francisco bay delta -- for sale in The Book Shop in Hayward. Why I didn't pick it up, I don't know, but the next time I went there it was gone. I've been kicking myself since.

Fred Sandsmark
Rocklin, California

Holt Responds: I certainly did misspell "Erle," as well as Anne McCaffrey's name, and Norma Montgomery has a few corrections and additional thoughts as well: "I paid no more than 25 or 50 cents for the Sue Grafton paperbacks," she writes, referring to Grafton's first three mysteries, "and Grafton sells through 'E', not 'D.' (Minor point.)

"Re the science-fiction cover illustrators: Boris Vallejo, Frank Frazetta, Michael Whelan and others are often as collectible as the content, sometimes moreso. Kids are discriminating, though, and they won't buy books that are real ratty unless they are also very rare. But cover art (especially some lurid stuff -- Vallejo's men have muscles and the women have boobs) does sell sci-fi and fantasy sometimes.

"The only Frank Herberts that sell well in lots are his Dune books. A full collection of those will bring double digits.

"Sandpapering remainder marks is unethical unless one conveys to the buyer that one has done this. And, too, it would have to be a very light remainder mark to succumb to a bit of sandpaper without damaging the page tops or bottoms." Thank you, Norma.

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Dear Holt Uncensored:

The book websites are wonderful! Could I, however, enter a plea for overseas bookseller sites? Some books are available only in, say, England, or are available there years before they hit the USA. (Some of Terry Pratchett's Discworld books are only for sale in Europe and will NEVER be found in the States.) Does anyone know of any overseas web sites that will ship to the US beside Amazon.com UK?

Steven Piziks

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Dear Holt Uncensored:

Re Asher Brauner's letter dinging American publishers who change British spellings and usage . . .

I agree that changing colour to color is unnecessary, but then again I've seen English usages that have radically different meanings to American readers. I'm reading a novel right now (translated from the Hebrew) where the British translator renders "sluttish" for "lazy." Most Americans are going to get a very different impression of the author's meaning from such a translation.

Max Dashu Suppressed Histories Archives
30 Years of International Women's Studies 1970-2000
maxdashu@lanminds.com

Dear Holt Uncensored:

When I wrote the first book in my mystery series set in Wales, I was conscious that I was writing for an American audience. So I was careful to use "flashlight" instead of "torch," etc. But now the books are also published in England and the British publisher didn't think to go through and edit out the Americanisms. So I'm getting irate letters from Brits, complaining about my mailmen and truck stops.

Luckily my US publisher has now given me carte blanche to make the books as British as possible, which certainly adds to the flavor and authenticity.

As a reader I have found several otherwise good books have been spoiled for me because Americans writing about Britain almost got it right, but not completely. It's hard writing at long distance. I know. I try to take a long trip to Wales every year so that I can catch up on the latest jargon, expressions, passions etc. Also to check that nobody has built a large supermarket in the middle of my favorite valley.

Rhys Bowen
Constable Evans Series

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Dear Holt Uncensored:

You write: "Sometimes aren't you so knocked out by the originality and adventurism of an independent bookstore that it doesn't matter how good the service is?"

No. Service is something I am willing to pay for. It enrages me when people say "shop at this store because its the right thing to do." I'll shop in places that value me and treat me well. In Portland that includes Borders Tigard and Borders Downtown. Our major independent store here is world famous but it has had almost NO customer service mentality. When I'm looking for a book, at Borders they walk me to the shelf. At Powells, they point to a place six rooms away and say "over there." Recently, the Powells info people have started writing down shelf numbers, but I've still had to search 20 feet of shelving for a particular book.

It is time for independents to wake up and smell the coffee. It is NOT persuasive to say "shop at an independent because if you don't we'll die." It is much more persuasive to make it the best shopping experience in town. Retail is about sales and SERVICE for the majority of customers.

Janet Taylor
NW Literary Agency
Portland Oregon

Holt responds: Just to clear up one thing: I would never ask anyone to shop at an independent bookstore because "it's the right thing to do." If being walked to the shelf by a clerk is important to you, by all means you should shop at the store where you're walked to the shelf. And you're right: Independent bookstores that don't offer good customer service are going to have a hard time surviving. What surprises me is that most of the time I hear the opposite - it's the independent who finds the book and takes the customer to it, the chain that points to the shelf. In any case, I'm talking about stores that offer a unique selection of books, or suggestions about gifted but unknown authors - to me, these qualities override the others. That's all.

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Dear Holt Uncensored:

I don't think you intended it that way, but the story of Norma Montgomery is profoundly depressing to those of us foolish to think that professionalism counts in the book business. Thanks to the Ultimate Swap Meet of Ebay, Norma's a bonafide bookseller, even though she knows nothing about business and can only make herself about .50 per hour.

Norma's the Scylla to the chains' Charybdis. Given a relatively level playing field, an independent bookseller has a chance against the well-capitalized but dinosaur-brained chains and superstores. But it's virtually impossible to effectively compete with a hobbyist who isn't particularly concerned that she's not making a living wage for herself.

I'm not criticizing Norma. In fact, I think there's a good chance she represents half of the changing face of business in America. (The dominance of megacorps is the other half.) But she's more likely to be a reason independent bookstores are going to be exterminated than a success story in bookselling.

I am going to criticize you for the following comment: "Sometimes aren't you so knocked out by the originality and adventurism of an independent bookstore that it doesn't matter how good the service is?"

I think your ideology is blinding you to the truth here. Service *always* matters. Sometimes price trumps service, but every market survey I've ever read suggests that it's the only thing that does.

An "original" and "adventurous" bookstore that has bad service is a bad bookstore. I don't want my customers to be impressed with my "originality" - I want them to walk away laden down with books and talking about what great service my store gives them. (Preferably not in that conscious a term - I'd rather hear about how nice we are or how we have everything they could possibly want.)

Letter writer Louann Miller (who sparked your comment) was right on this one. Independent bookstores won't survive on being cute and fuzzy and oh-so-independent. We need to do everything the chains -- and Norma Montgomery -- do for our customers, and we need to do it better.

A little less rhetoric from you on how special we are and a little more sharing of information on *how* we can be better bookstores would make this column significantly more useful to me.

Chris Aylott
Co-Owner, The Space-Crime Continuum bookstore
www.spacecrime.com
mail@spacecrime.com

Holt responds: Goodness, a little less rhetoric from me and I wouldn't know how to live. Remember that Norma Montgomery was joking about earning 50 cents an hour and doesn't see herself as a "hobbyist" at all. She fully intends to make a good living as an online used bookseller, and if you could see her correspondence you'd know just how professional she is. I ran this story because it's so hopeful, I thought, to independent booksellers who can make so much more money at this than the Normas of the world!

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Dear Holt Uncensored:

Your article on Norma was interesting but it certainly left the impression that her way was typical of Internet used book dealers. Nothing could be further from the truth. It is true that a number of dealers get by selling cheap paperbacks online, but the vast majority of the 6000+ dealers who do sell used books over the Internet have found that there has to be a minimum expected price in order to justify the time and effort. Each dealer has his or her own idea where it is - some say $5.00; in my case it is $8.00; others have cutoffs at $10.00, $12.00 or $15.00, and in the case of at least one higher-end used bookstore, $25.00.

Most of us deal almost exclusively in hardbacks and trade paperbacks for the online portion of our business. In fact my entire inventory of Mass Market consists of 9 Star Trek Photonovels and 7 Dark Shadows books by Marilyn Ross. I only have them because they are in-demand collectibles.

To get a better look at what the used book business is really like you might want to read this report from Book Hunter Press:

http://bookhunterpress.com/report.htm

Dennis Grannen

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Dear Holt Uncensored:

About our website, you wrote: "Zoe the 'Dog of Distnction' unfortunately misspelled ... "

Well, that's the last time we let the dogs prepare their own graphics. Thanks for the mentioning us!

"BOOKLINE BOOKSMITH"

Actually, that's "BROOKLINE BOOKSMITH."

Kip Jacobson
webmanager@brooklinebooksmith.com

Holt hand-wringingly replies: Thank you and apologies! The dog ate my spellcheck!