HOLT UNCENSORED #151
by Pat Holt

Tuesday, May 9, 2000:

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To New Readers: "Holt Uncensored" is a free online column about books and the book industry written by former San Francisco Chronicle book editor and critic Pat Holt. You can subscribe or "unsubscribe" by clicking here.

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ALIBRIS IN THE HOT SEAT
1. The (Perceived) Threat
2. The Promise
3. The Future

LETTERS

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ALIBRIS IN THE HOT SEAT
1. The (Perceived) Threat

Martin Manley thinks I may have "stumbled" onto something newsworthy: Seattle book dealers are expressing alarm that Manley's company, Alibris, is buying up store inventories and other huge collections of books, potentially leaving the used/out-of-print/rare book community high and dry. Manley says such fears are "silly."

So this very ebullient and engaging man - a former Assistant Secretary of Labor under Clinton, no less - sits across a table at Alibris, the company he co-founded, in Emeryville, California, to explain that Alibris is not a "monopoly," nowhere near it, as some of its critics (not me yet) have charged.

"Six months ago we employed 30 people," says Manley (Alibris now employs 100). "Suddenly we're asked about being a monopoly. I'm astonished and flattered."

Nor is Alibris a "malignancy," as some antiquarians have claimed. Nor is it engaged in a "harebrained way to boost its holdings so it can go public," as one irate Seattle dealer put it. Nor does it intend to be the Wal-Mart of the used/op/rare book industry - or does it?

"Let's be clear," says Manley, his hands flat on the table, his look penetrating. "As anybody trying to build a business, we're going to try to build Alibris as big as we can. As we grow, our dealers grow, but at the moment, we're not big enough to worry about."

Ah, but so much hangs on the phrase, "at the moment" - especially following a little explosion that hit the used book scene yesterday from Alibris.

This is an announcement that two book dealers, Taylor Bowie of Seattle and Jay Miller of Berkeley, have joined Alibris to set up a Book Purchasing and Referral Program in which Alibris will go into communities - Seattle and Berkeley to start - to solicit used/op/rare books itself.

While independent dealers are now the main source of the 10 million books Alibris currently lists on its database and the 400,000 books in its warehouse in Sparks, Nevada, the Book Purchasing and Referral Program will open up a new channel of "purchasing centers where scouts can bring books or the public can bring books," says Manley. "But the bulk of the work for these centers is to identify other collections."

The "other" refers to collections that independent book dealers may not have the deep pockets or the staff to solicit, says Manley. "We have the werewithall to do direct mail to, say, estate lawyers, and that will bring a whole set of collections in." Very large collections will be sought from libraries and dealers facing retirement.

Part of Manley's charm is that when he gets excited, he asks and answers rhetorical questions. "Will we be leafletting faculty mailboxes because faculty have oddball collections of books that we like? Yeah. Will we buy all of those? No. Very often we'll just put those out on our data base for dealers that want to buy them."

That's where the "Referral" part comes in. "Taylor Bowie, for example, can work the scouting network he's had for 30 years, at a place where book scouts can come and say, 'OK, here's a collection that I've got: Do you want it?' Taylor can say 'Yes, here's a referral fee,' or 'No, maybe another dealer wants it.' "

As to whether the public can bring in small lots of books, "so far the discussion in Seattle is that it's a service for dealers only, and I'm not sure what's been decided." However, "in Berkeley, the public can bring books in during certain hours."

While it's all very new and not completely thought out, Manley insists the program will NOT compete or interfere with existing stores. "We're not going to mark it up against our dealers in the local yellow pages or collectors' journals where they advertise, for example."

But this is where Alibris - already controversial for buying books from dealers at 20% off and for insisting that customers never contact dealers directly (see below) - now finds itself on the hotseat even more.

Whether Manley is aware of it or not, the Purchasing and Referral Program has taken off so fast and so aggressively that many book dealers fear Alibris is pushing itself in front of customers, "vacuuming up the supply lines" and becoming very much like the dreaded Wal-Mart of years past.

Already, Bowie has not only sold Alibris the inventory of his own store, Bowie and Company, he has bought all or part of inventories in stores ranging from San Diego to Seattle. Since February, he has acquired 400,000 books for the program - Alibris' entire warehouse in Sparks, Nevada, holds an equal number - and has indeed taken a large ad in the Seattle Yellow Pages that competes with existing dealers.

Jay Miller has also sold Alibris the inventory of his store, Berkeley Book Company, and he's opened a storefront called Berkeley Book Buyers that solicits not just collections that independents can't find or buy. This office buys just about anything (except textbooks) it can resell at a minumum of $6, according to a buyer on duty yesterday.

"We Love All Books," its ads proclaim, and "All Subjects," and "We Make It Easy" by offering "Highest Prices Paid" and "House Calls Available" and "Curbside Service" because "Buying Books Is All We Do!"

Perhaps it's not supposed to sound like a book dealer's ad, but it does. ("TOP CA$H PAID," reads the Yellow Pages ad for Green Apple Books in San Francisco.)

After seeing Manley, I sent him this email: "I'm still not sure why used/op/rare book dealers shouldn't feel threatened by your new Purchase and Referral Program. Aren't you, by setting up these buying stores/offices, stepping in front of local dealers to buy collections that would often (not always, I realize) come to them?"

His answer: "We will buy fewer than 5% of all the collections that come to us - and the number will probably be less than 1%. Of the collections we do buy, most will be very large - - the kind that few of our dealers have the financial or operational resources to handle. The net benefit to our dealers is overwhelmingly positive -- a free source of collections that they would not otherwise have had access to."

Hmph. Sounds a little cryptic, no? Maybe the right hand doesn't know what his two left hands are cooking up out there in the field. After all, when asked about Alibris' relationship with its biggest dealer, Powell's Books in Portland, Oregon, Manley is adamant.

"Will it someday happen that Michael [Powell] and I compete for a collection? Probably, but we're never going to go to Portland looking for books. That's his territory. If I even hear of a collection we probably won't even bother putting it in the database - I'll just email it to him. I just wouldn't do that. He tends to hear about these collections through relationships he has, and they're going to call him. And that's just fine. We're going to end up with the books, anyway."

If that's so with Alibris' biggest dealer, why isn't it so with Alibris' accumulated dealers?

In the long run, even Manley calls his Purchase and Referral Program "an experiment" with a "50-50 chance" of succeeding, so maybe enough protests from dealers who are not "overwhelmingly positive" about the program will have an effect.

Then, too, the used/op/rare book business is so infinite that most observers believe no one could ever "vacuum up" all the supply lines or "get a corner on the used book trade," as some book dealers have suggested.

Indeed, in the brouhaha that emerged over the first inklings of the Purchase Program, many dealers scoffed at those who feared Alibris was going to make independents obsolete. Within seconds, however, the scoffers were accused of being "in denial" about Alibris, and more haha was added to the brou.

But what is Alibris TRYING to do? Only six months ago, the number of books listed on its database was 4 million (it's 10 million now) - is it growing so fast that mowing down a few resistant dealers along the way seems a small price to pay? Is Alibris turning into a villain? Or was something like Alibris inevitable all along?

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Part 2: The Promise

To many consumers, Alibris is that hip, wiseacre Internet bookseller that takes out full-page ads in the Wall Street Journal featuring some great old treasures from childhood.

One ad pictures a dog-eared copy, at least 30 years old, of "Phyllis Diller's Housekeeping Hints." On the top of the book a single line of text reads: "June 8, 1967. You purchase as gag gift for older sister's wedding shower." And below the book: "Jan. 4, 2000. She finds on Alibris in time for your third trip down the aisle."

That wry, sassy tone is perfect for another Alibris ad, this one showing a torn copy of "Instant Replay," the Green Bay Packers diary of Jerry Kramer, also 30 years old. Top line: "Jan. 19, 1970. Mom accidentally donates to church book drive." Bottom line: "November 30, 1999. Mom redeems herself on Alibris for son's 40th birthday."

Alibris plans to spend $100 million on this and other forms of marketing by hitting a nerve that's exposed to more than nostalgia: Alibris is big, and wants us to think about big themes in our life, like the passage of time reclaimed, of books you haven't thought about for years but would love to own again, of literary connections one can share regardless of age.

It's the fun of rediscovery and it's bookish at the same time: Who can turn away from weird bald heads floating around the cover of the science fiction classic, "Mutant," by Lewis Padgett? The top line reads, "April 11, 1977. Freaked you out so bad you had to bury it." Below: "Jan. 25, 2000. Unearth on Alibris for son who shares your sci-fi gene."

The Alibris campaign is creating so much demand for used, out-of-print and rare books, says Manley, that book dealers should be happy. Compared to auction sites like eBay and dealer listings such as Advanced Book Exchange, Alibris is bringing in customers who never thought they'd care about used books - before they saw an Alibris ad.

"In theory if all you did was gather books in one place," he says, "you would drop the price. If you didn't bring any demand, the price would fall on each of those books. That's of course what's been happening for 3 years. These dealers by aggregating suddenly would put themselves out of business. The price would just collapse on these books because you'd have all supply and no demand."

On the other hand, that's NOT what's been happening. The marvelous (and what can perhaps be called old-fashioned) Internet way of business is for like-minded people to meet online for the benefit of all. The Internet, because it brings millions of customers to places they want to go, creates its own demand.

The success of eBay, ABEbooks, Bibliofind, Bibliocity, the growing Bookavenue, the price-comparison Bookfinder and others proves that as the Internet becomes a way of life, so has the used/op/rare book community grown as well.

Alibris has come along more in an Amazon.com mode than anything else - it's big, and it wants to build an empire. With $60 million in venture capital, Alibris is aggressively going after libraries (a staff of five now works this market), foreign sales (a warehouse is planned for England), chain bookstores (Barnes & Noble recently declared it will list Alibris books first, Advanced Book Exchange second) and national book distribution (Ingram, the largest book distributor in the country, now lists Alibris books and became a recent investor, bringing in new millions).

And Alibris wants to clean up an already "chaotic" cyberlandscape, says Manley, that's been plagued with problems involving secure credit card sites, incompetent and fraudulent dealers, confusing book descriptions (used/rare/op books need a LOT of description), different pricing systems, shoddy fulfillment, late payments to dealers and so forth - all of which Alibris has faced and is resolving on its own site, he adds.

But even before the Purchasing and Referral Program, Alibris' cocky you-listen-to-us mentality got the company in trouble with those independent, often very eccentric, don't-tell-me book dealers. For one thing, unlike other Internet dealers, in particular Advanced Book Exchange or http://www.abebooks.com , instead of allowing consumers who find the book they want to contact the bookseller directly, Alibris handles everything.

With a warehouse holding about 400,000 books in Sparks, Nevada, and a database of some 10 million books, Alibris doesn't want you to know who's the source of the book. It's building a brand, and the brand is Alibris.

"We're the dealer," says Manley. "Somebody standing at Cody's bookstore in Berkeley looking for an out-of-print book doesn't want to be asked, 'Do you want this to come from Boise, Ohio or London?' They're just looking for a copy of the book. All they want to know is, if it's from Alibris, it's a reliable sale."

As to those who stay home and search the Internet for books, Manley doesn't think customers will mind paying a markup for the efficiency and reliability he believes he's bringing to the marketplace. "We give our dealers high-speed catalog tools and marketing services," he says.

"Our fill rate when we went from being a listing service to an e-commerce company was 55%, so your odds of getting a book were barely a coin toss. That's what they are now on ABE and Bibliofind. We know that.

"That's okay there are people who will put up with that in exchange for best price, or with unsecure credit-card transactions, or with wildly varying shipping rates, or with dishonesty. It's not that ABE and Bibliofind are dishonest - they're totally honest - it's rather that there's no check on that system, whereas there is here.

"Today we fill orders at about 85% out of our network today and are introducing new technologies to cut that 15% in half because we'll substitute dealers. You won't know where you got it, but we'll get the book for you." Egad, he sounds positively "customer-centric."

But many book dealers have resisted from the beginning. About 1500 sell through Alibris, a small number compared to the 6000 who sell through Advanced Book Exchange or ABE, whose list represents about 18 million books.

For one thing, ABE charges a relatively small fee for the use of its site, while Alibris takes a 20 percent discount from each book it buys from book dealers.

For another, the basis of used/op/rare book dealers has been a network of personal connections and recommendations that pivots on the relationship of bookseller and customer. Granted, the business has changed so much in recent years that many dealers say they sit all day at their computers and rarely see more than a handfull of customers walk in the door.

But for Alibris to prohibit book dealers from communicating with their buyers, even and especially on the Internet, seems to some - not all by a long shot - a great loss, if not a final injustice.

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3. The Future

Was Alibris inevitable, given the Internet's emergence and all the used/op/rare book listing services that are now being "partnered" or swallowed by corporate entities (Bibliofind was bought by Amazon.com; Bibliocity by Alibris, which itself is being "partnered" to B&N)?

Many dealers feel something like it was bound to come along, just as Amazon.com or its equivalent was certain to march into the new-book industry.

Empire-building is hardly new to the Internet, but key to all such concerns is the guy at the top, and at this point the start-up excitement at Alibris is so electric that nobody cares if Marty Manley, who explodes with 100 ideas a minute, may not always have a good one on deck at present.

His latest notion: "We've done a deal with a community organization that trains inner-city kids in supervised work environments. "You know how Goodwill thrift shops get lots and lots of books? Well, the idea is that we'll help pay and train these inner-city kids to filter through the books at Goodwill.

"We'll skim the top 10% off those books and keep them, and make a donation to Goodwill.The rest of the books will be kept by the kids' organization and sold at subway stations as a kind of small enterprise - little paperback books for subway riders. The organization likes it because here are jobs for kids who need a structured work situation. We like it because it may turn out to be, aside from civicly responsible, a source of books we can get on the Internet."

Gee, the sellers at eBay are not going to like this, I say. Many of them look through Goodwill for books they can buy for a quarter and sell for 50 cents. It's just one little trickle to you, but it's a nice river of income to them, and for Alibris to go vacuuming up --

"Oh, those folks will have gotten to the books at Goodwill before we do," Manley says. "Our kids will be going through them AFTER the books have been in the stores, and BEFORE they get culled." But didn't you just say Alibris will skim the top 10% - "our kids are not going to go store to store; they'll be working at a big center. Of course this isn't even happening yet." You haven't done the deal? "Just in discussion."

Well, let's back get to what some dealers fear IS the inevitable - that Alibris is going to drain every community of every single used/op/rare book it can find in every single outlet available, including the smallest and most out-of-the-way Goodwill bookshelf.

How would an eBay trader really feel? A few months back I learned about eBay-trading from Norma Montgomery, a former business word-processor who now makes her living off eBay by selling used books she finds at garage sales, thrift stores and the very same Goodwill. Here's her response to Manley's small idea (re Goodwill), and to his giant idea (Alibris as world force):

"Well, I'm not as surprised as you, I think, at the notion that people go through Goodwill books before they are put on the shelves. Sneakier eBayers than I have been known to slip store managers a tip for permitting them a 'first look' at incoming merchandise.

"I'm also not necessarily convinced that an inner-city child (one presumes) can quickly be trained to spot every saleable book in a thrift store.

"You know, I've used Alibris only two or three times, back when I was buying more than selling. I had no complaints at all with the service, and I did not feel I overpaid for the merchandise. In fact, I bought one book from a small bookseller in Los Angeles via Alibris and turned around and eBayed it for three times what I'd paid. I recollect that I did have email contact with that small seller.

"What you describe overall, however, does make me nervous. I do not relish the thought of hundreds more people out there ransacking every thrift store for the bargains I can now collect routinely. But, then, that goes on already and bargains are still to be found.

"That the stock of many current used bookstores will end up the possession of Alibris (rather than, for example, Friends of Library booksales or thrift stores) also concerns me.

"But, again, I see the sources of used books as so vast that no one entity could possibly corner the market anytime soon. I may rue these words some day, but it's just very difficult for me to envision Alibris acquiring every book of value.

"Yesterday I found a copy of a book Shirley Jackson wrote in 1956 entitled 'The Witchcraft of Salem Village.' It is a Landmark book for young adults. And it is THE Shirley Jackson. I mention this not to brag at my brilliance in finding this but to say that I had seen this book on at least two previous visits, and only yesterday did I actually pull it off the shelf and see who the author was. It had been there at least a month.

"My point is that good books are to be found, and even with scouts everywhere, the good books are STILL to be found."

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LETTERS

Dear Holt Uncensored:

Once again, Publisher's Weekly's reporting on Amazon.com politely obscures the staggering truth. In its May 1, 2000 issue, PW reports (p. 16):

"Amazon.com reported that sales in its first quarter ended March 31, 2000, rose 95.5%, to 573.9 million. The company's operating loss deepened to $198 million from $52 in last year's first quarter, while the net loss increased to $308.4 million from $61.7 million."

PW could make this a bit clearer: Amazon's sales increased by 95.5%, BUT its operating loss deepened by 281%! And its net loss increased by 400%!

Doesn't look so rosy this way, does it?

Don Frew Shambhala Booksellers