NORTHERN CALIFORNIA INDEPENDENT BOOKSELLERS ASSOCIATION

HOLT UNCENSORED #15
by Pat Holt

Friday, November 10, 1998

NOTE TO READERS: Another castastrophe has hit the book industry in the form of Barnes & Noble's recent purchase of Ingram, the country's largest book distributor. Today's column addresses this new development. Items that were to appear - Pat Schroeder, Stacey's Bookstore, Amazon.com, a great new "webring" and some great books for the holidays - will appear in Friday's column. The next chapter of Remainders of the Day will appear November 20.

INGRAM, B&N AND THE RIPPED LID SYNDROME
THE INDEPENDENTS REACT
WHAT READERS CAN DO

INGRAM, B&N AND THE RIPPED LID SYNDROME

While the world waits to see if the Federal Trade Commission or the Justice Department will stop or even investigate Barnes & Noble's recent purchase of Ingram (the country's largest book distributor), it may be instructive to look at this crisis a different way, from an angle (only the shadow knows) called . . . The Ripped Lid Syndrome.

The Ripped Lid Syndrome occurs whenever a catastrophic event proves so murky and confusing that ensuing investigations - while never resolving the catastrophe itself - rip the lid off surrounding systems to reveal routine incompetence and ugly scheming underneath.

Take the assassination of John F. Kennedy. We may never know if Lee Harvey Oswald acted alone (or if he was even involved). But thanks to 30 years of feverish investigation, we do know that every agency designed to protect the President (Secret Service, FBI, CIA) was not doing its job - and seemed, moreover, to be on some fantastical adventure the day Kennedy was killed. Even the Mafia couldn't carry on as America's Thugs, since it was off trying to murder Castro at the time. This lesson - that The System, left unexamined, can turn so weak and corrupt that it invites something as horrible as a presidential assassination - seems even more important now than finding out the identity of JFK's killer(s).

Similarly, we may never know the full extent of Ronald Reagan's involvement in the Iran-Contra affair, but the hearings about it ripped the lid off the top of the Pentagon, revealing illegal and covert military operations writhing and squirming in the basement. Watergate was another great RLS: It doesn't seem to matter any longer that the break-in was the work of a bunch of losers working for Richard Nixon's staff, if not RN himself; what matters is that subsequent investigations ripped the lid off the White House to reveal a paranoid president (one of many, it turned out) secretly recording conversations in the Oval Office as routinely as taking vitamins.

But perhaps The Ripped Lid Syndrome has its most comic-tragic impact in the book industry, where catastrophic events seem to be happening every day. HarperCollins' termination of 106 author contracts, for example, appeared to be unique and tragic in its own right - until other publishers admitted they did the same thing routinely. The only difference was that Harper got "caught" by doing it publically.

More recently, while Bertelsmann's acquisition of Random House threw the book industry into the worst imbalance of the century, perhaps more important is the ghastly realization that Bertelsmann seeks world domination; it has no intention of competing on a level playing field; existing agencies concerned with "justice" or "fair trade" are simply consumed by this guzzling behemoth.

RLS #2: When Bertelsmann crossed the line by doing the unthinkable - merging publishing and bookselling through its purchase of 50 percent of barnesandnoble.com - the lid was ripped open a little more. Now we could see the Riggio brothers (owners of Barnes & Noble) themselves not even pretending to seek a level playing field when their stocks AND sales AND store openings took a downward turn. Attempting to reconstitute Barnes & Noble as a formidable contender, the Riggios had the audacity to gobble up Ingram, a move that may prove ruinous to the entire book industry. Meanwhile they are still trying to portray themselves as saviors who will "revolutionize the book distribution business in the next century." (Gad! Such doubletalk sounds like a spoof right out of Remainders of the Day).

THE INDEPENDENTS REACT

The first impulse among independents after the Ingram sale was to boycott the company Right Now. After all, Barnes & Noble is one of two chain bookstores that have been responsible for the bankruptcy and closing of half the independent bookstores in the country. "This stinks," said one independent of Barnes & Noble's latest move. "We're buying from anyone EXCEPT Ingram." But since Ingram IS the largest book distributor in the country, terminating orders for its many titles was seen to be "cutting off our noses - we're not suicidal, you know," said one buyer. So a second adjustment was made.

Booksellers often use a cascading system of wholesaler selection when they figure out the daily order of books they need from distributors. First, they send the whole order to the top name - up to now this has usually been Ingram - which fills all the orders it can. Those books not available from the top guy are sent to a second, more specialized wholesaler - say, Book People, Baker and Taylor, or (in the West) Koen Pacific or (in the Bay Area ) L-S. Titles not available there go to a third and fourth dealer, etc., until the whole order is filled.

Since the Barnes & Noble purchase of Ingram, however, many independent booksellers have removed Ingram from the top of the cascading system and placed it at the bottom. They have encouraged local and specialized wholesalers to beef up their inventory; they have increased direct sales with publishers and publisher-distributors such as Publishers Group West; and they are assessing anew the many systems (inventory control, website database) that Ingram has so carefully embedded in the independent's daily life.

Perhaps most sensitive, and alarming, is the confidential portfolio that Ingram has built up on each independent it serves. "When an independent bookstore opens up an account," says a former publisher, "Ingram demands more credit information than most other wholesalers regarding annual sales, square footage, financing and a host of other goodies.

"This is all done in the spirit of establishing 'good credit.' Ingram also asks (at least from some stores) for updates on their annual sales so that it can reconfigure that account's 'open-to-buy.' Once Barnes & Noble gains access to Ingram's database, they will have all this supposedly confidential information at their fingertips, thus giving them a good picture of any particular independent's financial health. Kind of scary, isn't it? And even scarier to the bookstores."

What is perhaps scarier to consumers - nee readers - is that ANY new burden on independent bookstores could be lethal to our system of many different bookstores serving many different audiences through many different books. Independents are vital to this system yet they have borne the largest burden, having survived the first chain stores (B. Dalton, Walden) in the '70s, price clubs and general discounters (Costco, Walton, Target) in the '80s, superstore chains (Barnes & Noble, Borders) in the early '90s and Internet book suppliers (Amazon.com) in the late '90s.

WHAT READERS CAN DO

To survive this new catastrophe in the midst of the most important selling season of the year (it's six weeks to Xmas), these bookstores need our business more than ever. Here's how you can turn this tragedy to an advantage: Pledge to buy NOTHING BUT BOOKS as gifts for the holiday season (a good thing to do throughout the year and during all holiday seasons, by the way); concentrate your shopping at one or two or a handful of independent bookstores and NEVER SET FOOT IN A BARNES & NOBLE OR BORDERS STORE AGAIN; seek out the best websites of independent bookstores and NEVER ORDER FROM AMAZON.COM AGAIN; when in doubt, BUY BIG GIFT CERTIFICATES right now at your local independent - this helps finance the store (cash flow is the hardest problem for any retailer right now).

If all this urgency and stockpiling and catastrophe-talk sounds a bit overheated, remember the scene described in this column last week when Borders appeared at a Planning Commission meeting for a permit to locate across the street from the independent bookstore, Solar Light. The fact that the Planning Commission voted against Borders does not detract from the warlike presence of the chain store that day (and other days, it seemed clear, at other Planning Commission meetings throughout the country).

Here was the Borders spokesperson, the Borders architect, the Borders community relations manager, the Borders events coordinator, the Borders representative from the downtown store, the Borders representative from the mall store and a Borders clerk or two all testifying that Borders was the best thing for consumers since soda pop (and you know how toxic that stuff can be). In terms of paid representatives, Solar Light was represented by its owner and one clerk.

The Borders testimony was larded with the kind of baloney Steve Riggio likes to use when he says the Ingram deal is "great news for book lovers everywhere." Well, let's rip that lid right off the playing field, to mix metaphors for a moment. What he really means is it's "great news" for the Riggios, a horrible loss to book lovers everywhere, a death knell for many independents and a huge blow to the development of an informed citizentry that makes our democracy work.

"This is a war," writes one bookseller, referring specifically to Barnes & Nobles' purchase of Ingram, "and every book sold a bullet. Every sale by Barnes & Noble is a bullet at us, and every book sold by an independent is a bullet at Barnes & Noble." And that's just the opening salvo.

\r