NORTHERN CALIFORNIA INDEPENDENT BOOKSELLERS ASSOCIATION

HOLT UNCENSORED #133
by Pat Holt

book Tuesday, February 29, 2000:

HOW TO PATENT AIR AT AMAZON.COM
BOOKSELLERS ON THE WEB

LETTERS

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HOW TO PATENT AIR AT AMAZON.COM

You'd think a person who's critical of Amazon.com would be unshockable by this point, but I have to admit to being shocked to my endpapers last week when Amazon.com was granted another government patent, this time for its "affiliate" program technologies.

As you may remember, Amazon.com was the first company on the Internet to pay a commission to other websites for acting as Amazon "affiliates" by sending paying customers its way.

Other "e-tailers" have used the same idea - Barnes & Noble's "associate" program, for example - and by now, hundreds of thousands of affiliated or associated agents are out there earning money by picking up a percentage of the sales they refer to a variety of online services.

The new patent, granted by the U.S. Patent Office a week ago, opens the door for Amazon.com to stop all its perceived competitors from using this kind of system, and to charge a fee of those who do.

It's similar to the patent Amazon.com took out on its 1-Click technology in September of 1999, which allows registered customers to make purchases by a single click on the right icon. As soon as the 1-Click patent came through, Amazon.com took out a lawsuit to stop Barnesandnoble.com from using its own single-step purchase system.

In the patent field, companies can fight such suits by saying the technology in question is so obvious that all competitors will figure it out on their own, in which case nobody can have an exclusive patent on it. Observers believe this is true in the 1-Click case. They say the U.S. Patent Office is so obsolete when it comes to the computer age that it doesn't know what it's doing - if it did, the 1-Click patent would never have been granted to Amazon.com.

In fact, Amazon.com's image took such a beating when the 1-Click lawsuit was announced that customers announced a boycott and experts recoiled at what they felt was an abuse of the principles underlying Internet competition.

"Are they [Amazon.com] going to patent air next?" asked John Segrich, an analyst with CIBC World Markets Corp., quoted by CBS Market Watch.

Indeed, the philosophy behind the Internet is to open things up to everybody, not close them down. Amazon.com's grab for power looks greedy and opportunistic rather than smart and careful, as it might have been in a Ruthless Competition 101 class on Earth.

The futher shock is that in the early days, Amazon.com founder Jeff Bezos won a huge following as an advocate of the wide-open, pro-user, freedom-in-cyberspace notions that attracted millions to the "instant democratization" of the World Wide Web.

Now Bezos, especially in this second patent for "affiliate" technology, looks like a "king of the jungle" megalomaniac who's out to crush the very network of admirers and supporters - not to mention alienating customers - he says are so valuable to him.

For example, Lee Benson, an "ezine" writer ( http://Ezine-Traffic.com/ezines ), says the patent, if enforced, "could entail me losing over HALF of my monthly revenue." He writes: "I was so shocked when I read the release [about Amazon.com getting the "affiliate" patent], that my mind wandered off in countless directions, trying to grasp the devastating effect that this could bring to the world of e-commerce."

CBS Marketwatch calls the granting of this patent "a move that could shake up electronic commerce" and quotes Walter Linder, a patent attorney with Faegre & Benson in Minneapolis, who says the patent "is pretty broad. I think there might be a lot of Websites that will have to change their affiliate programs to get around this."

"Now [Amazon's] business model is clear. They will be able to raise prices by the cost of their license fees. This will get them out of the red, and force their competitors to withdraw. When that is done, if it's allowed to happen, there will be a single e-commerce vendor, Amazon," writes Dave Winer in Scripting News, an Internet service.

This will be true even if Amazon.com never enforces the patent, and thousands of affiliate-websites wait for the other shoe to drop.

It's very much like the dilemma publishers encounter when they are bought by a huge foreign company like Bertelsmann or von Holtzbrink: These huge conglomerates are often more supportive of slow-moving literary books than are the American houses they buy; they are reputed to leave their subsidiaries alone; they don't demand higher profits, and they like to appear benevolent and avuncular from afar.

Nevertheless, it's a terrible arrangement whenever the acquired publisher has to depend on the largess of its parent corporation. Eventually, the publisher is going to take directions from the owner and as a result, new, risky, breakthrough material that doesn't fit the conglomerate profile is going to slip through the cracks.

In the Amazon.com example, this routine filing for patents as a means of holding power over the heads of thousands of entities on the Internet is about as far from being "customer-centric" as one can get. Depending on the largesse of Amazon.com NOT to sue is bad enough.

But pretending there's nothing wrong with Amazon's bid for monopoly, its punitive lawsuits, its long-held attempt to drive independents out of business and its refusal to collect sales tax - all of this is far more difficult to stomach.

Will customers care? Dave Winer of Scripting News says they will: "The issue for customers is fairly simple. If Amazon has no competition, prices are sure to go up, and further, the competitive environment of the Web will die. . . [But] customers can turn the jets in the other direction. It's quite simple. Buy from [Amazon.com's] competition, now, while they still exist. That would be an example of the Internet routing around an outage, something it's famous for."

Of course we have to remember that customers, even those who love the Amazon.com website and are addicted to buying everything they need from it, are secondary to the Amazon.com empire.

For this company, as long as it's bailed out by Wall Street, image is everything, and power-grabbing moves like this smack of desperation, greed and betrayal. Only last week, Internet pioneer Jim Warren told the New York Times that the goal of the personal computing movement several decades ago was to "place computing power into the hands of individuals, rather than to allow it to remain exclusively the domain of corporations and the government."

That's still the goal. In fact, that's the reality. That's what makes every user as powerful as every other, and every abuse on the Internet writ large. When a company like Amazon.com tries to control, manipulate and overpower the Internet for its own ends, don't think millions aren't watching "in shock."

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BOOKSELLERS ON THE WEB

Politics & Prose, Washington, D.C. http://www.politics-prose.com/

You'd think the idea of the bookstore as a community center would apply only to neighborhood brick-and-mortar stores. Yet "walking" onto the website of Politics & Prose, I always get the feeling I'm in the nation's capitol and every bit of the talk, the energy and the busy intimacy of this great bookstore (Publishers Weekly's 1999 "Bookseller of the Year") has some kind of political edge to it.

Oh, one expects the homepage this week to suggest Molly Ivins' hysterically funny biography of George W. Bush, "Shrub," which it does (and friends, if Americans do read this blistering indictment of "Dubya," expect John McCain to be the next Republican nominee). But it's the conviction of owners and staff in the P&P Pantheon of "unusual and high quality books" that wins readers' votes, as here are titles the store has sold "scores of copies" of, whether they're hot or not - books that are soon to be classics like "Angle of Repose," "Corelli's Mandolin," "Praying for Sheetrock," "My Own Country," "The Jew in the Lotus" - and all of them with easy-click access to more titles by the same authors.

We learn from the "Who Are We?" page that Politics & Prose started out 15 years ago "with $100,000 and 1400 square feet of sales space," surrounded by Crown Bookstores that might have put the fledgling P&P out of business. But the store established its unique identity very fast. "We didn't try to compete with Crown," the owners tell us. "We could be selective, a quality that our customers value."

This is such a vital point! When people ask why they should "limit" themselves to browsing in a store that's smaller than say, a 25,000-square-foot chain, Politics & Prose is here to tellya that careful selection of books on the basis of quality helps immensely for customers seeking a book to suit personal tastes. It takes a long time to find that kind of book in a shotgun store that looks like Toys R Us. (All the titles look the same!) But you can easily find MANY such books in a store that surrounds you with titles the buyers and owners believe in, and this website is similarly jammed with veritable treasures where ere you go. Of course the New & Recommended Titles page offers only three books ("The Walking Tour," "The Book Borrower" and "Boy with Loaded Gun") - testimony to the fact that in this bookstore, the buyers' sense of customer interests rules out a lot of publishing effluvia.

"In this increasingly fragmented age, people crave public places where they can relax with friends or in solitude," the owners write. You have to trust a place that supports a Community Health Center's attempt to "dispense books instead of candy" to children by sponsoring a book drive that engages customers, offers discounts and brings board books and picture books in three languages to very young readers who would otherwise see no books at all. That's just for starters at this searchable database with beautifully described staff picks and a sense of pride in bringing us all "the best books in print in our opinion."

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LETTERS

Dear Holt Uncensored:

AlterNet News is at http://www.alternet.org/

UUNET, division of MCI-WorldCom is at http://www.alternet.com/

JFC

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Dear Holt Uncensored:

Re your coverage of sales taxes, a study quoted in Computer World says that states lost $525 million in uncollected Net sales taxes in '99

Of the $13 billion in potentially taxable retail goods that were sold online in the U.S. last year, 80% -- or $10.4 billion -- wasn't taxed, according to Forrester Research. See original report at:

http://www.computerworld.com/home/print.nsf/CWFlash/000225EF7A

David Wilk

Dear Holt Uncensored:

You mentioned in your last column a way to be able to have privacy while on the Internet, but did not mention how to get it. I suspect many readers of the column would find this of interest.

Holt responds: You can do this in several ways, none guaranteed, but read on:

Dear Holt Uncensored:

I'm not sure exactly what you mean when you write "who knows how many cookies are already chewing around the edges of the screen you're reading now."

But if what you mean is, "Who knows how many cookies have inserted themselves into your system now?", it's easy to check. For example, in Netscape you look in a file called COOKIES.TXT. Moreover, if you use a text editor and robustly ignore the warning at the top "# This is a generated file! Do not edit.", you can harmlessly delete as many lines as you like. (I've just gone in there and deleted every line inserted by Doubleclick or the similar Hitbox.) Don't use a word processor for this unless you know how to get it to save as plain text.

P.S. Here's some more interesting info on Internet snoopers: http://www.tiac.net/users/smiths/privacy/wbfaq.htm

Peter Evans

Holt Responds: The website Peter mentions in his postscript contains questions and answers about "Web bugs" that everyone should know (don't "look" at 'em! they go right through your eyeballs!) plus the address of a cookie-crippling website with easy-to-follow instructions - this is http://www.junkbusters.com/ht/en/cookies.html#disable

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Dear Holt Uncensored:

If you choose to publish this letter, I wish to remain anonymous since I have been associated with business that use DoubleClick.

In all fairness to the weasels at DoubleClick, you can opt-out of their cookie tracking service. It's quite easy to find out how if you just go to their Website (insert sarcastic grin). If you go to http://www.doubleclick.net:8080/privacy_policy/ and search the fine print for the word "opt-out," you will be taken to another page http://www.doubleclick.net:8080/privacy_policy/privacy.htm where you will be bombarded with more fine print urging you to not opt-out: "DoubleClick believes all users should have a positive Web experience."

If you choose to continue, at the expense of not having a positive web experience, you will go to this page http://www.doubleclick.net/optout/optedout.htm where the opting out is completed. Unfortunately this has to be repeated for every browser that you use.

DoubleClick is actually one of the few advertising web sites that allows you to opt-out of their tracking system. It is a bit disturbing to me that the media would spend their time attacking this company for gathering so much data. Much more could be accomplished if the media would instruct the public about opting-out of systems like DoubleClick and informing the public about other Internet services that don't allow for opting out.

There are a number of web sites that offer information about cookies like http://www.cookiecentral.com and http://www.junkbusters.com .

For more information and instructions about opting out of other collection services, go to http://www.precipice.org/privacy/ .

A Reader

Dear Holt Uncensored:

You are probably hip to this, but I don't recall seeing any advice about purging Amazon.com in the newsletter and you might want to pass on this info. I discovered today that by using the advanced search option in my search engine, I can EXCLUDE the words amazon.com. The welcome result is much more compact and informative hit lists. All those disgusting cross references to the Amazon beast are gone!

Gerald Kaminsky

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Dear Holt Uncensored,

I'm responding to Peter Schneider's letter in Holt Uncensored #132. How does he justify selling proofs and ARC's that are clearly marked "Not For Sale"? I know there is a market, and I have seen them for sale in used bookstores. As a buyer I get many copies myself. I either keep them or pass them on to customers, other employees or friends. I have never sold one on-line or to a used bookstore. I asked one of my sales reps, and he responded that yes, the publisher knew these were being sold, but it was too much trouble to follow up on all the offenders.

I think Peter's practice of not selling until a year has passed is a step in the right direction. But not selling something marked Not for Sale would make more sense. Responsibility vs. greed.

Jan Warner-Poole
Wayside Books & Video
wayside@waysideworld.com

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Dear Holt Uncensored:

Writing about preserving publishers' old files, Peter Schneider said: "The one publishing person who recognized this problem was Peter Mayer. When he was CEO of Penguin, he set up a climate-controlled library in the basement of the Saatchi building and hired two curators who made sure that all old files and books were catalogued and kept in order. It was a thrilling experience to go down there and see the entire history of Viking, Dutton, NAL, Signet and all the others in one place. Quite frankly, I don't know if this library still exists, after the merger with Putnam."

I suspect the crucial point would have come when Peter Mayer had to leave Penguin, not when the company bought Putnam a couple of years later. Putnam is even older than Penguin, after all, though that doesn't necessarily mean the corporate culture puts the same value on its archives. I share Mr. Schneider's hope that these records were preserved, if not in an office building then in a library.

J. L. Bell
JnoLBell@compuserve.com

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Dear Holt Uncensored:

Peter Schneider is quoted as saying: "In the case of bound galleys, they [publishers] seem to feel that if an employee sells these either before or just after the book itself is published, it's the equivalent of stealing."

The equivalent of stealing?! Don't bound galleys say right on the front that they are not to be sold? How much more "stealing" do you want?

It IS stealing, whether you wait a year or wait ten years, whether you are an employee of the publisher or a second-hand dealer. The author of the work is deprived of royalties s/he is legally entitled to from the sale of a retail copy every time someone sells an Advance Review Copy, and the seller is commiting a crime.

I'm sorry, but I just don't think there's any excuse for selling these ARCs when they expressly say they are not to be sold.

Julie Kistler

Peter Schneider responds: The subject of the sale of bound galleys is a gray area. In my various talks with publishers, most of them say that the "Not For Sale" statement on the cover is meant to prevent anyone from selling this proof in lieu of the finished book. I find it hard to believe that anyone would purchase a proof of Peter Straub's GHOST STORY, for example, instead of a readily-found mass market edition. The proof of this book would cost $30-40; the mass market costs $7 or $8. You can also make the point that anyone who's buying a proof of a particular book has purchased a copy of the actual book as well.

Most people in book dealing realize that older proofs are in fact collectibles. I don't think there's anyone out there who intends to defraud a publisher or an author out of their rightfully earned sales or royalties -- and in fact they aren't.

Peter Schneider

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Dear Holt Uncensored:

Can you give us more details about what happened to the original concept for Booksense.com? Was it too hard technically? Too expensive? Too much like trying to herd cats?

Kate Derie
Creator of the ClueLass HomePage, http://www.cluelass.com
Editor of the Deadly Directory, http://www.deadlyserious.com

Holt responds: Len Vlahos of the American Booksellers Association has just sent a letter to booksellers in which he explains the reasons Booksense.com didn't make its projected debut of last Fall. "While we do take full responsibility for the delay, the truth is that the New York office of our development firm, iXL, delivered a product that was too flawed -- both from a design and technical development standpoint -- to release. We had no choice but to discard the work iXL had done, and revisit the entire process. Our mistake was in not recognizing the problems with the iXL product sooner, and in doing a bad job of managing expectations." Vlahos says the ABA will stick with iXL on the new product, which he hopes will be ready by the summer. See the complete text at http://www.bookweb.org/news/btw/2922.html , and thank you, Thom Chambliss of the Pacific Northwest Booksellers Association for sending word of its location.

I should take responsibility for my own description of this project as "the failed Booksense.com." To watch how fast Amazon.com is growing, how deftly the chain stores' websites are making a bridge to their brick-and-mortar stores, how beautifully independent services like Booksite.com have helped many independents launch their own websites and how courageously other independents have designed and sustained websites by themselves is to feel an entire universe has been created - and left the moribund Booksense.com in the dust.

Many booksellers feel it's not too late, however. Hut Landon of the Northern California Independent Booksellers Association and proprietor of Landon Books, writes as follows: "I can only tell you what I believe, that the Booksense.com site will be of much more than some use to hundreds of independents who are not yet on the web. And I don't think our time has passed to get on the web. Since I and many other stores that I talked to had terrific holiday seasons without a website, I am quite content to wait for the right prosduct and make sure we do it right."

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Dear Holt Uncensored:

I've been following the Holt newsletter's bittersweet adventures of hand- and independent seller/auction book sales. Somehow, the story of "84 Charing Cross Road" comes to mind. It was that delightfully true tale of a WWII British bookseller and an avid reader in the US (never mind that Helen Hampf was famous -- that was immaterial to the sales). One of the charms of the story is a lesson that bears noticing: Independent bookselling is not necessarily a highly profitable venture. It certainly has to be a harder course to pursue in the age of mega-chain competition.

Perhaps independents can focus on developing the image of their readers/customers as cultured highbrows much like Ms. Hampf, and the image of independent book sellers as personal literature consultants and real-life communicators, much like the 84 Charing Cross Road's retailers. The dignity and humor of the "Charing Cross" relationships are surely more endearing than those of today's on-line customers identified as impersonalized credit-card digits to their dollar-happy cum cutthroat book dealers.

Literature is all about the refinement of character and vicarious experiences. Current marketing trends are demeaning to customers left hostage with decreasing choices in the marketplace. Megachains are insulting to the individual thinker and to society at large via the abuses of the marketplace. They discourage refinement and ethics. Why not promote the concept of refined conduct for the betterment of all concerned? Obviously, the monetary and morality issues alone have not brought the desired changes to the monopolizing abuse of the bookselling market.

Aim for the optimal psychology of the buyer-seller relationship. Clearly, none of the great economists whose theories are studied over the years accounted for avaricious and inethical retailers. It's time for consumers to conduct themselves accordingly. Patronizing civilized merchants in a civilized manner is a recourse that is long overdue.

Barbara Roberts
BRWRITE@juno.com
Baltimore, MD

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Dear Holt Uncensored:

I can't believe the good timing of your last column (#132). It added fuel to my fire and hopefully helped to buttress my argument to the school board. Let me explain: My elementary-age school children came home last Thursday with a flyer from schoolcash.com. It is an online "school fair" designed to help individual schools raise money. The concept sounds great. Buy online items, and a percentage of the money spent is donated to the school by the respective company from which you are purchasing.

Then I looked closer at the flyer: "....brought to you by SchoolCash.com in association with Amazon.com." ARRRGGGHHHHH!!!! Not only did the flyer list all the discount rates available on Amazon, it also showed the 20% cash-back offer in bold letters. The financial situation of Amazon has been no secret; they have yet to show a net profit.

I contacted Bill Petrocelli of Book Passage bookstore in Corte Madera for any (non-emotional) ammunition he might provideand he cordially sent me a copy of the draft of the boo, "Main Street Alliance." I have spent the last three hours typing, copying and cutting and pasting letters to our five school board members, the district superintendent, the school principal, the school PTA president and our local paper. We'll see how far that goes. Has anyone else heard about these "virtual bookfairs"?

Lisa Musick
Little Professor Book Company
Temecula, CA
hxbuff@iinet.com