Holt Uncensored

Holt Uncensored


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by Pat Holt

Tuesday, October 31, 2000





How I have admired Barnesandnoble.com [the Internet site] for remaining separate from Barnes & Noble [the chain store], because whenever the question came up about "nexus" (the brick-and-mortar presence requiring online retailers to pay sales tax), Barnesandnoble.com would say:

Oh, we don't have "nexus" in THAT state, or that one or that one or that one. Instead, we have this distant fuddy-duddy cousin we stopped talking to years ago because who could keep track of its 6,532,023 (just kidding) stores that have nothing in common with us who live in cyberspace?

And Barnes & Noble the fuddy duddy cousin would say, Well! We may own 40% of Barnesandnoble.com but remember how cravenly we sold off another 40% to Bertelsmann because really, Barnesandnoble.com is the banished black sheep in the family that's always losing money and running off with the wrong element. We would never give them "nexus" except in the few states where our giant distribution centers won't allow either of us to get away with murder.

All of this was, well, a fabrication, but at least a known fabrication, until last week, when suddenly Barnes & Noble showered its 551 stores with plans to build "Internet service counters" that will provide direct access to its "sister concern," Barnesandnoble.com.

Oh, they're sisters now. Not only that, but according to the Wall Street Journal, the dear siblings have "unveiled details of a broad partnership" in which Barnes & Noble stores will accept returned books from Barnesandnoble.com and even "launch a membership loyalty program to reward customers who shop in both channels."

Gosh, what a loving family.

Let's hope you remember this, all you state governors whose legislatures are going to start passing laws pretty quick to recover the billions in lost sales tax: When it comes to "nexus," why, Barnes & Noble and Barnesandnoble.com are as close as the Gish Sisters in "Orphans of the Storm," huddling, struggling, clinging together on the old corporate iceberg until the lights and cameras shut off and they walk away with millions.

Yesterday the American Booksellers Association sent a letter to every governor in the country "urging them to fairly enforce the existing sales tax regulations in their states," says an ABA press release.

"Coming just days after Barnes & Noble announced plans to further integrate its online and bricks-and-mortar strategies, the letter points out that by 'hiding behind the facade of a "separate" Internet company, many national retailers are dodging their legal responsibilities' to collect sales tax."

Bravo, ABA, bring that pressure to bear. Why, he more publicity this issue gets, the more you realize it's not the Gish Sisters but Rosemary Clooney and Vera Ellen singing "Sisters" in "White Christmas" that is very much to the point.

What a sister act! There they are on the nightclub floor with their sparkly dresses and big feather fans singing about their devotion to each other but also about that pesky competition that can break even the closest sisters apart:

"God help the Mister / Who comes between me and my sister, / And god help the sister / who comes between me and my man."

How did the Wall Street Journal miss this great analogy? You can just see Barnes & Noble and Barnesandnoble.com enter singing, "God help the taxes / That comes between me and my nexus" (okay, so it doesn't rhyme, so sue me).



What he says in 'The Business of Books'

One of the apparent myths of book publishing that Andre Schiffrin tries to dispel in his blistering memoir, "The Business of Books" (Verso; 181 pages; $23; buy online at www.codysbooks.com), is that to be a distinguished publisher of intellectually chalenging books, you can't survive in the profit-making world of corporate publishing.

Schiffrin was the director of Pantheon for nearly three decades before he was forced out in 1990 because he refused to buckle under, he says, to pressure from Pantheon's parent company, Random House, "to cut our list and staff by two-thirds and concentrate on the books with the largest printings," he writes.

Four senior editors at Pantheon quit in protest over Schiffrin's departure, and "several hundred people, including authors such as Kurt Vonnegut and E.P. Thompson [and Studs Terkel], demonstrated outside the Random House building."

Schiffrin insists that while there were "years when Pantheon earned only a small amount . . . at no time did we lose any money out of pocket. That is, Pantheon covered its own costs even if it did not always contribute the required amount to Random's expenditures, a sum of which we were never informed and could not negotiate."

That kind of corporate paternalism, says Schiffrin, was a more frustrating source of conflict than the question of whether Pantheon was profitable. He characterizes the villain at the time as Random House head Alberto Vitale, a "businessman with a thuggish disposition and a thoroughly anti-intellectual attitude."

Vitale announced when hired by Random House owner S.I. Newhouse "that he was far too busy to read a book," says Schiffrin, and thus "asked disdainfully" about Pantheon's 1990 spring list, " 'Who is this Claude Simon?'. . . having clearly never heard of the Nobel Prize-winning novelist, 'and this Carlo Ginsburg?'. . . probably Italy's best-known historian."

Thus began a classic confrontation between Schiffrin, the traditional backlist publisher (start small and trust the reading audience to find and keep buying your books in perpetuity) and the new front-list publisher (start big and make an immediate profit by convincing audiences you've got a "hot" one they've got to read right now) that Schiffrin feels has overtaken the book trade.

Vitale should not be remembered, Schiffrin indicates, as the tough taskmaster bringing business disciplines to a gifted editor accustomed to the parent picking up the tab. Rather, Schiffrin says, Pantheon performed with fiscal integrity during its stellar literary tenure. Vitale, on the other hand, was a corporate dictator/company axman who demanded obeisance from his imprints.

"As Vitale admitted in a later interview, he had to make an example of Pantheon," Schiffrin writes, "since we had been the most adamant in insisting that our profits from commercially successful books should be used to underwrite the costs of more demanding titles."

Thus came the shouting matches that were inevitable, Schiffrin believes. " 'What is the sense of publishing books with such small printings?' [Vitale] shouted. Were we not ashamed of ourselves? How could I face myself in the mirror each morning knowing that I wanted to publish such hopelessly unprofitable titles?"

The irony was that Pantheon's spring 1990 list did indeed have a "hot" book - in fact a projected series of books - by cartoonist Matt Groening that was based on a new television series called "The Simpsons."

"We had no idea these books would eventually sell millions of copies," Schiffrin writes, "but we knew that . . . if the Groening books performed as we expected, we were likely to be among Random's most profitable holdings."

Thus came the next step in the clash of backlist vs. frontlist, literary vs. commercial that Schiffrin and Vitale represented. Schiffrin believed that the Groening books would "more than amply pay for the losses that might be incurred by the more difficult [slow-to-sell] books. But Vitale's new policy was that each book should make money on its own, and that one title should no longer be allowed to subsidize another."

At the same time, Pantheon was seen as a money loser because its own bottom line had been carved up for other purposes. "The profits from our successful children's books were no longer to be attributed to us," Schiffrin writes, "nor were the sales of our university textbooks."

Once this kind of accounting, and the notion that profit-and-loss statements should be created for every book on the list, became a general rule in mainstream publishing, Pantheon became, as one Newsday writer would later describe it [paraphrased here by Schiffrin], "very much an island within the Random House sea." In the power struggle Schiffrin believes Vitale represented, Pantheon had to go.

Having rid itself of Schiffrin and his followers, Random House went on to adopt ruinous commercial policies, Schiffrin contends, and was subsequently dumped by owner S.I. Newhouse on the giant German conglomerate Bertelsmann, which has combined even more houses from Bantam Doubleday Dell to create a staggeringly large publishing empire.

This is why Schiffrin's story, whether you like reading it or not, is so instructive. When he was growing up in the 1940s, there were "hundreds of publishing houses" visibly contributing to the mix of books that would form the literary base of the nation's culture.

Today, although many thousands of publishers are registered in Books in Print and dozens of small presses are publishing midlist and literary books, the fact is that "five major conglomerates control 80 percent of American book sales," Schiffrin writes. "In 1999, the top 20 publishers accounted for 93 percent of sales, and the ten largest had 75 percent of revenues."

Wanting no part of these falling dominoes, Schiffren went off to found The New Press, a nonprofit house that uses grants from foundations as its seed money for projected lists in which some books will be profitable, some not. Having bulked up to a staff of 18 over a ten-year period, The New Press published 70 books last year - "one-tenth of one percent of the total published in the country," Schiffrin notes.

But its titles are notable, to say the least. Studs Terkel's books classify as small institutions in their own right, as do such titles as John Bower's "Embracing Defeat: the History of the American Occupation of Japan," which won the Pulitzer Prize, the Bancroft and the National Book Award last year and sold an astonishing 50,000 copies in hardcover.

What he says in person

When I caught up with him in the middle of his book tour, Andre Schiffrin could hardly contain his excitement about what was happening in Europe as the result of "The Business of Books."

"In Italy, the small publisher of the book had a brilliant idea," he says. "In 12 different cities on the same day, debates were conducted on the future of bookselling and publishing in Italy. It worked out fantastically well - they [his publisher] got 50 articles in the Italian press, and they got a bill into the Senate to protect small booksellers. Book prices are protected in Italy, as they are in Germany, but that's all in danger now."

Schiffrin often returns from Europe with books and ideas that don't interest others in publishing. How he sees himself in and out of the American book industry became the subject of our interview.

Q: Do you think people in publishing regard you as a turncoat, a treasonous influence or bad boy of publishing, or are people beginning to see you as a publisher of vision who's been maligned all along?

A: I've been surprised and pleased by the number of letters from young people in publishing who've read the book and are interested in seeing what publishing has been about through my experience. With the exception of Random House, which is still out there spinning against the book, people have to agree that what I was afraid was going to happen has indeed taken place.

Q: By "spinning," do you mean the "Random House spin doctors" you characterize in the book "who poured out phony arguments and falsified figures" about you and Pantheon? You think they're still out there after all this time and a change in ownership trying to discredit you?

A: Yes, I do. I find the same paragraphs in the press about the book that have been obviously fed by Random House. Of course, it's been 10 years. You'd think they wouldn't continue this, since what Vitale tried to do turned out to be such a disaster - [his regime] made less money than ever before and ruined the firm's reputation. I find it interesting that what happened to us happened to Times, Basic, Free Press and other highbrow parts of large firms.

Q: Of course Bertelsmann, the new regime, says that it is decentralized and likes to give its subsidiaries freedom to act on their own.

A: Not when it states in black and white, in its official newsletter from Germany, that it wants a 15% profit and 10% growth. The message is, you can be as independent as you want, as long as you make another $250 million every year.

Q: In this climate, is it possible today to carry on the kind of backlist publishing you practiced?

A: Yes, Norton, which distributes the New Press, is one successful independent publisher, and there are others, although every time I read about an independent house, it's up for sale. Harcourt is on the block [Note: Harcourt was sold this week to Reed Elsevier] and The Fourth Estate in England was recently sold to Rupert Murdoch.

Q: What do you think needs to be done to turn the tide?

A: One of the main problems is that antitrust legislation has never been enforced. I mention at the start of the book that when Random House bought Alfred A. Knopf in 1960, the story hit the front page of the New York Times and the attorney general's office was on the phone to Bennett Cerf immediately. The total value of those two merged houses was $15 million. But when, 40 years later, America Online Purchased Time Warner in a $165 BILLION deal, the attorney general didn't make a single call. Antitrust litigation was never mentioned.

Q: People say the reason is that publishing is just now going through the kind of consolidation that's already affected the rest of American business.

A: Well, look what happens as a result. Random House management has let it be known the new skyscraper they're building in midtown has 40% fewer offices than the current Random House premises. That means every other person is going to get fired, and of course you can see why: They've already merged Vintage and Anchor, and they have three mass market lines they need like a hole in the head, so those three are going to be boiled down to one line with different labels. What a way to tell people, leaking the news out.

Q: Do you think smaller presses will fill in some of the gaps you mention?

A: There are lots of possibilities. In terms of quality, Greywolf, Seven Stories, 4 Walls and others are doing very good titles. I see for example that Seven Stories, not Bertelsmann, published the last Kurt Vonnegut title. But when you think of the grip the top 20 firms have on more than 90% of book sales, you realize that in terms of distribution alone, there's not a lot of room for independent presses.

Q: You have harsh words for publishers turning themselves into an entertainment industry that has down-marketed books so much that the very character of American intellectual life seems in jeopardy. Are you saying that readers can never come back to the former level of buying and appreciating intellectually challenging books?

A: No, I'm not, because The New Press itself has had so much success. The audience is still out there for difficult, demanding books, which we have found can be sold in sufficient quantity to return a profit. It's just that, as Neal Gabler has said, American readers must learn to go beyond the big houses to find the books that really matter.



Dear Holt Uncensored:

It's ironic that Bertelsmann, a booming international giant, should claim ownership of the Frankfurt Book Fair. As I recall, a great deal of the discussion at the 1999 BEA concerned the idea that international rights may be a dying profession. Reminds me of Yertle the Turtle, King of the Mud.

There are two important trends that undermine the need for the Buchmesse (though I confess that I had a great time). The first is the emergence of tools like rightsworld.com and subrights.com. Although still small, these tools will gradually put tremendous power in the hands of small publishers who want to maximize the value of their copyrights.

The second is the concept of permission marketing. Suppose a small press specializing in children's books can purchase "opt-in" email lists of specialty bookstores and other retailers around the globe, all of whom want to hear about new books for pre-teens. With a network of international printers and distributors (or wholesalers), the publisher can "go global" without a direct sales force and keep the subrights.

If you think through the process, there are a couple of tools that the publishers need. One is software that can send electronic product announcements (including cover images, review quotes, maybe even audio or video author interviews) to a long list of email addresses. Another (ideally) is the ability to deliver electronic review copies. With such tools and processes in place, both publisher and retailer benefit, and the "interoffice mail of international companies" becomes less powerful as a competitive advantage.

Pete Alcorn
NetRead, Inc.

Dear Holt Uncensored:

Read with interest Stephen Blackmer's letter regarding the errors in Andre Schiffrin's "Business of Books." The only glaring error I saw and can't seem to forget is the fact that he (Schiffrin) blew the spelling of a major literary name - it's Woollcott, for cryin' out loud, Alexander Woollcott! Two o's, two l's, two t's! Sheeesh.

Randall Platt

Dear Holt Uncensored:

Regarding Andre Schiffrin's "The Business of Books," I would like to add one more correction to the list compiled by Stephen Blackmer (HU#192). The Dutch firm Wolters Kluwer is incorrectly referred to in the book as both Walter Kluwers and Walters Kluwers, neither of which is correct. Moreover, these errors appear on pages 116 and 147, respectively, but the index cites the occurrence of a Walter Kluwers on pages 114 and 145. Lastly, the company name is listed in the index under K, as if it is a person's name, rather than W. I wonder why Random House isn't filed under H?

Lance Wobus

Dear Holt Uncensored:

[Re your mention of the Online Shopper in the New York Times who used price comparison websites for books,] one thing I didn't mention when I spoke to her was that I *wanted* to add BookSense to my book price comparison at least for the purposes of branding - let people know it's aware of them. But BookSense's affiliate agreement states first and foremost that one can't list it and other bookstores on the same site or page. So that did it for them.

Glenn Fleishman


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