Wednesday, January 7, 2009

Bookselling in a Time of Disaster

by William Petrocelli

In the last several weeks we've been hearing stories about how the recession has hit bookstores around the country, and it confirms what we've suspected. The best we heard was a drop in business of 10%; the worst a drop of 30%. In a business where the profit margin even in good years is somewhere between 1% and 2%, this is not good news.

The whole economy is in recession, so maybe this shouldn't be surprising. Booksellers have gone through recessions before, and most have muddled through without help--no one ever asks Joe the Bookseller for an opinion; bail-outs are never put on the table.

But we sense something different here; this recession looks bigger, longer, and uglier than its predecessors. The effects on the book business could be disastrous.

A Business in Crisis

This recession hits at a time when the book business is already in crisis. The problems at the bookstore level are probably well-known. The mindless expansion of chain-bookselling in the last couple of decades has led to a glut of cavernous stores--in many chainstores, at the moment, it is not uncommon to see extra-wide aisles separating endless shelves of thinly-stocked merchandise. Independent stores have been fighting to hold on to their share of the bookselling market, but there is little doubt that the overall floor-space nationally has outrun any increase in the number of book buyers.

The crisis at the publishing level may be less well known. Within the last few weeks several major publishers have announced major cutbacks in staff. Some have suspended the purchase of any new books; others have cut-back drastically on advances to authors. These moves may be in response to declining sales, but they probably also reflect a rumor that has been galloping through the business: the imminent bankruptcy of one of the bookstore chains. The publishers worry about being stuck with a mountain of unpaid invoices. In a sense, it is misleading to talk about American publishing as a business. The major publishers are all owned by foreign corporations (the one exception is Viacom's Simon & Schuster division). In most cases, the book publishing business is only a small part of a large overall company and only rarely a significant money-maker. Simply put, non-publishers control most of the publishing business. Dedicated editors and publishers within those companies continue to seek out quality authors with the hope of publishing them, but sooner or later the booklovers bump heads with the bean-counters.

What's Next?

Something has to change within the book business; the current system is becoming more and more dysfunctional. What will happen is hard to determine at this point.

At the publishing level, you have to cheer for the booklovers over the bean-counters. If a chainstore or some other customer stiffs the company for a large unpaid bill, the first instinct of the bean-counter is to tighten the screws on the other booksellers to make up for the losses. The booklover's first instinct, however, is to start working more closely with the bookstores that have successfully promoting and selling books to make sure they don't succumb to the same economic difficulties. At stake is the future of quality publishing--the nurturing of new authors, author tours, and the promotion of books of substance.

At the bookselling level, independent bookstores have to become less retail-only stores and more like neighborhood centers with author events, classes, and an array of community activities. Book Passage has been moving in that direction--quite happily, we might add--for the last several years. We plan to do more of that.

At the customer level, you have to remember that you have choices--at least for now. The first instinct for anyone caught in a recession is to cut back on all purchases. But when everyone cuts back on everything, the recession only accelerates. A better approach is to concentrate on quality purchases. If that becomes the criterion, maybe good bookstores will be able to ride out the recession. We may be biased, but we believe there is no better high-quality, value-per-dollar, feel-good purchase than a book.

And when you buy a book, you are casting your vote for two things: (1) for the book and the author who wrote it, and (2) for the bookstore that sold it. That second vote presents a question you have to ask yourself: is this the bookstore that I want to see in business a year, maybe ten years from now? As they said on November 4, every vote counts.

Financial Armageddon?: Is That Finally Reason Enough to go After

"Financial Armageddon"--that's how Governor Arnold Schwarzenegger described California's fiscal crisis (San Francisco Chronicle Dec. 11, 2008). The choices being debated in Sacramento seem to be either drastic tax increases or drastic cuts in service.

Well, just how bad does it have to get before the state decides to collect back sales taxes from We noted a year ago that California's refusal to institute a collection action against Amazon is costing the state at least $48,000,000 per year and probably more than $500,000,000 in unpaid back taxes. That was a year ago; the numbers have undoubtedly grown since then--particularly if you had in the interest on all the back payments.

The Board of Equalization and its staff will tell you that they can't be sure that they will win a case against But the Supreme Court case they keep wringing their hands about was decided well before the internet was invented, and it did not involve the multitude of in-state contacts and associates that Amazon uses. We've been trudging up to Sacramento for the last ten years, pleading with them to take the first step--they can't win the case, if they refuse to file it. But they won't budge; we're still not sure why. All we know is that has plenty of lawyers that can present its case; it doesn't need state-paid attorneys to do it for them.

In the meantime, keeps rolling along, competing unfairly against local merchants and depriving local governments of badly needed revenues for police, schools and other community services. The next step, no doubt, will be for the state to raise taxes on all the rest of us who have been faithfully paying taxes all these years.

This is some Armageddon.

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