HOLT UNCENSORED #6
by Pat Holt
Friday, October 9, 1998
BERTELSMANN'S FIRST APPETIZER
HOW TO CONQUER the publishing world: Did you see that Bertelsmann, the German media conglomerate, announced plans Wednesday to buy half of Barnes & Noble's online division for $200 million?
This means all those pesky intermediaries - bookstores, wholesalers, critics and perhaps libraries one day - may now step aside as Bertelsmann, having recently paid $1.5 billion for Random House, which it then combined it with Bantam Doubleday Dell, pursues its goal to merge not just houses but the entire publishing and bookselling process.
It's kind of amusing to remember Barnes and Nobel's vice-chairman Steve Riggio's words squaring off a few months ago against Amazon.com, the web's present bookselling giant. "We think competition makes us better," Riggio said. "It forces us to innovate more. It makes the consumers responsive to new and innovative ways of merchandising. When the consumer wins, the market expands." That's good, Steve! Tell us more from inside that Bertelsmann pocket.
In any case, look what happened once Bertelsmann snarfed up barnesandnoble.com: "The initial public offering of barnesandnoble.com will be temporarily postponed as a result of this transaction," says a Bertelsmann press statement. What a boost to the competitive spirit.
Still, think of the new opportunities for Bertelsmann. Now the company can take an idea or article from one of the American magazines it owns (Family Circle, McCall's) or the life story of a singer it owns - sorry - a singer who appears on one of the music labels it owns (RCA, Arista), and turn it into a book that's funnelled directly to the reader without losing a fractoid of a percentage point to distributors along the way. Since 5.5 million members already belong to Bertelsmann's U.S. book clubs, the process of idea-to-book-to-reader can be contained in that sanitized, streamlined way that makes consumers feel so safe, so cared for, so protected.
One day people will be able to say, "With a Bertelsmann book/CD/video/magazine/floor polish/irradiated vegetable/political candidate/Constitutional amendment, I know I'll never be bothered by an original thought or idea again."
And gee, I hate to take credit for this, but it could be that Middelhoff read about how dinky the online name of Bertelsmann's proposed Internet moniker, bol.com, sounded to Holt Uncensored a column or so ago. He might have then figured, Whoa, the name of barnesandnoble.com is much longer and, you know, already established to Americans, so we' ll just buy it for the U.S. market and let bol.com dominate Europe. And say, what's that line from "Titanic"? Something about being the king of the world?
Or maybe it's a line about BIG SHIPS COLLIDING. Here comes Bertelsmann, which pulls in about $14 billion a year, steaming forward to wipe out Amazon.com (whose stock fell 14 percent the day after Bertelsmann inhaled barnesandnoble.com). And here comes Amazon, already accustomed to losing $20 million-plus per quarter, having branded American backsides until not a one of us can sit down without thinking about clicking in an order.
So let ‘em square off, we say! Let the so-called big guys brand themselves to death while the so-called little guys - independent bookstores with actual character to their stores and websites, interest in books of ALL kinds, in-store and on-web book events and relationships with live customers -- stay in business until the shooting's over.
What the Bertelsmanns, Amazons and B&Ns of the world haven't figured out yet is that Big Business' addiction to big deals, big numbers, big systems and bigness for bigness' sake is boring Americans to the bone. The dullness and predictabilty of the malls is sending people out in droves, and one day, if they haven't already, they will leave the mallification of the Web. Ironically, the greatest threats to the big guys are the very consumers Bertelsmann has sworn to serve - consumers who are already buying (and selling) books like mad at eBay and other sites where companies like Amazon and barnesandnoble.com are themselves seen as costly intermediaries to be avoided at all costs.
Chapter 5 of Remainders of the Day is with the rest of the story in a separate column on this website.