Many years ago, when Len Riggio and Barnes & Noble used $275 million of Michael Milken’s junk bonds and bought B. Dalton’s 779 stores, which controlled one billion dollars of bookstore market share, Riggio promised the publishing industry that he’d maintain the B. Dalton company as a separate operating entity from the Barnes & Noble chain.

From The New York Times, 1986:
“Mr. Riggio, whose 35 Barnes & Noble stores are situated mostly in the New York City area, said that he would continue to operate the two chains independently…He specifically said that Barnes & Noble would continue to sell only discount books, and that B. Dalton…would continue to sell the major portion of its wide selection of stock at full price…When one bookseller buys another…there is concern within the industry that the combination will restrict the number of authors that appear on bookshelves, and industry insiders expressed those concerns over the purchase of B. Dalton. Though all stores carry the same best-selling books, their stock of midlist books—the industry term for lesser-known [new] titles—differs from one chain to another. If one buying office begins to buy for both B. Dalton and Barnes & Noble, those insiders say, the variety of books available to consumers in the market could be reduced….Mr. Riggio insisted that the purchase of B. Dalton was not ‘connected’ to his strategy at Barnes & Noble. The ‘center of gravity’ for B. Dalton, he said, ‘will remain in Minneapolis; B&N’s will remain in New York.’”—Lisa Belkin, “Discounter Purchases B. Dalton: Barnes & Noble Adds 779 Units To Book Realm,” New York Times (November 27, 1986): D1.

Instead, today there are no B. Daltons in the country; they have been steadily closed down over the past 24 years. Wherever Barnes & Noble stores opened, B. Dalton stores were closed.

In those years, B&N also bought the Doubleday bookstore chain: twenty stores that were subsequently closed down. B&N bought Bookstop and closed all the stores…. And so we see that this is the Barnes & Noble technique. Get access to someone else’s money (for instance, in the 80s and early 90s by running up huge debts to publishing houses, selling the books those publishers provided, then taking a very long time to pay the publishers for the sold books), and use the cash so obtained to take more and more bookstore competitors out of the market, by acquiring these competitors and shutting them down.

…And then…turn on the people who provided the money to do this (the big publishers) — and manipulate these publishers to act in a manner that’s unprofitable for them, by dictating what they should publish….or by making publishers pay for in-store display.

Blogger report from an educational program in 2009 with B&N buyers:
“As the morning progressed, it quickly became clear that book buyers have a lot of control over what publishers publish. Not only do the buyers get the final say on whether a book appears in their store, Edward and Sallye emphasized that they may influence a book’s packaging (from the cover design to its trim size), price, publication date, and even store category and placement. From this standpoint, it appears that publishers are far from having the upper hand in their relationships with book buyers.”

http://nyupubposts.wordpress.com/2009/09/27/publishing-buying-power-at-work/

Publishers Weekly report from 1994:
“Among the examples of illegal practices mentioned in the suit…was Barnes & Noble’s ‘bestseller pricing’ system which requires publishers to pay for their titles to be discounted as bestsellers—even though [sic] may never be true bestsellers—by having them pay fees of at least $18,000, terms that are not available to independents. To illustrate the financial effect of the illegal policies, ABA’s [Executive Director Bernie] Rath noted that Barnes & Noble had said in 1993 that publishers had paid it $11 million in coop money, substantially more than the chain’s profits….”—John Mutter and Maureen O’Brien, “ABA Sues Five Publishers,” Publishers Weekly ABA Show Daily (May 28, 1994): 1.

So much is well understood inside the book industry. B&N is a big bossy bully. We knew that. Publishers have to publish with B&N in mind (and the books so published get sold through all channels). Publishers have to pay B&N to get the books thus created also displayed in decent spots in-store.

Len Riggio did not tell the truth in 1986 about his plans for the future of his company’s relationship with publishers. He planned to use his control of the market in order to manipulate publishers, and he proceeded to do this very quickly.

Well, how should we read stories about Barnes & Noble’s big plans for the future? Should we believe anything they say? Should we assume they have the interests of publishers, authors or readers at heart? Whose interests are they really serving?

From a recent investor conference call, as reported in Publishers Weekly:
“[Mitchell] Klipper said the children’s department continues to be the fastest growing area at the stores, and that over the summer B&N will roll out its educational toys and games and school departments to 400 stores….”

“Klipper didn’t deny there will be fewer bookstores in the country, but both he and Riggio said B&N will be the beneficiary of the consolidation…. Riggio agreed that the number of traditional bookstores will be consolidated, he said given B&N’s strong numbers he expects B&N “to be the ones doing the consolidating.”

http://www.publishersweekly.com/pw/by-topic/industry-news/bookselling/article/43738-barnes–noble-sees-bright-future.html

But, meanwhile over at The Eric Carle Museum (inside of which I operate an independent children’s bookstore), according to Publishers Weekly:
“The symbolism was not lost at this past Tuesday’s meeting of the New England Children’s Booksellers Advisory Council, held at The Eric Carle Museum of Picture Book Art in Amherst, Mass., that Ken Geist, v-p and editorial director of Orchard Books and Scholastic Press Picture Books, and author of the picture book The Three Little Fish, should choose this setting to ask independent booksellers to get behind picture books. “I’m not finishing this year until we move the needle and sell more picture books,” said Geist, who added that he was not speaking on behalf of Scholastic. “I’m here to talk about what we can do collectively to raise the profile of picture books.”

http://www.publishersweekly.com/pw/by-topic/childrens/childrens-industry-news/article/43542-an-impassioned-plea-for-picture-books.html?utm_source=Publishers+Weekly%27s+Children%27s+Bookshelf&utm_campaign=aa98276b4c-UA-15906914-1&utm_medium=email

And, WHY was Ken Geist so worried about the future of children’s picture books?? Why was he begging of all people those legendary weaklings, the indie bookstore owners, to strive to save the picture book…?

As indie bookseller Josie Leavitt reported on her PW blogpost about the same presentation:
“One statement Ken [Geist] made that chilled me was that Barnes and Noble, in their store redesign, has removed the picture book back wall from its stores. Instead there are activity books and some picture books mixed in. No longer is there an unbroken expanse of picture books; the message that sends is enormous. If parents only see activity books or media tie-in books, then that’s what they’ll buy.”

http://blogs.publishersweekly.com/blogs/shelftalker/?p=1309

So — if the children’s book section is the fastest growing section of the B&N stores, as stated in the investors’ conference call, AND B&N is now dramatically backing away from children’s picture books and replacing these with activity books and educational toys…..well….what is the truth? Are they HAPPY with their children’s book sales….or, not??

When B&N talks, should anyone listen to what they say?

Let’s put this all together. Barnes & Noble has a history as a so-called consolidator, meaning that they specialize in controlling the marketplace by constricting it. They REMOVE bookstores, they REMOVE sales opportunities. Then, panicked publishers pay when B&N says pay, publishers publish what B&N says they should publish.

That is: Barnes & Noble has an abusive relationship with publishers. With every move B&N makes to tighten a noose around publishers’ necks, by “consolidating” the market, publishers make nice ever more energetically.

So the risk is that publishers will enter the eBook market with their eyes on Barnes & Noble…doing things the B&N way. …that publishers will pay fees for placement on B&N’s website, pay fees for write-ups in B&N e-newsletters, pay for display of images, chapters, pay, pay, pay to access the market they see B&N as providing.

But I wonder. With Ken Geist asking indie booksellers to help…. Is it possible that in this industry cycle, publishers will not be fooled again?

Is it possible that as B&N plays its consolidating game, closing stores, reducing shelf space for real books (bringing in toys) — THIS time publishers will stop running from the bully, and instead stand their ground and look the bully in the eye?

What could publishers do to end their abusive co-dependence on Barnes & Noble? Are they simply going to play along whenever Barnes & Noble sets up a new system of rules and regulations? As the new eBook market emerges, and Barnes & Noble endeavors to corner that market — will publishers permit this?

From the investors call, as reported in Publishers Weekly:
“Riggio and other executives, including CEO William Lynch, also stressed that B&N already has a larger share of the e-book market (20%) than it does of the bricks-and-mortar store market (17%). Lynch said given the investment necessary to sell a large number of e-books, he believes the e-book market will be dominated by only three or four players.”

Will publishers let this stand? Or will publishers ensure that eBooks are available for resale by a very wide variety of retailers? Will they ensure B&N cannot corner this market? It is for publishers to decide….and should they once again permit B&N to control their fate, then once again, they will pay the price, suffering editorial-unit dismemberment, corporate takeover, downsizing….

And it’s not necessary. Publishers, stand firm against Barnes & Noble this time! Work with indie booksellers to ensure you maintain your freedom to make your own publishing decisions. The eBook market belongs to the publishers. You can keep it that way.

 

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