Buy the book
Robert Klara is just the kind of enthusiastic young customer giant bookseller Barnes & Noble is seeking.
Mr. Klara, a magazine editor living in New York City, buys at least three to four new books a month. He also likes to give books as gifts and relishes time spent in bookstores, including the Barnes & Noble near his office. "I enjoy the physical act of browsing," he explains.
But the affection Barnes & Noble might feel for Klara is not entirely mutual. He has been reading about the company's proposed acquisition of another industry titan, wholesale book distributor Ingram Book Group, and he's worried.
The acquisition "would seem to be giving Barnes & Noble an unfair competitive advantage," he frets. "They're a business predicated on moving popular books, not the best books."
Klara's concern is only one among a number of unhappy scenarios haunting book lovers. They worry that the $8 billion consumer book publishing industry is rapidly consolidating into a handful of corporate monoliths interested only in cranking out predictable bestsellers. At the same time, they fear the demise of the friendly corner bookstore.
And for many, Barnes & Noble's $600 million bid to buy Ingram - the world's largest wholesaler of books, with 11 high-volume, high-speed distribution centers - spells cause for further alarm. (See story right.)
Book wholesalers - also known as distributors - are middlemen who constitute a vital link in the industry chain for most booksellers. They offer one-stop shopping: a single source for books from scores of different publishers at discounted prices and rapid turn-around times. For most operators - especially in today's increasingly competitive market - such services are not a luxury but a necessity.
Once Barnes & Noble owns Ingram, many industry observers worry, it will not only have first dibs on all the high-volume blockbusters, but will also have access to all sorts of sensitive information about Ingram's many other customers - the independent booksellers. Access to details such as profit margins, credit lines, and buying patterns, some say, would enable Barnes & Noble to steamroller smaller competitors.
Of course, the company has issued assurances that its only interest in the purchase is to increase speed and efficiency throughout the industry, and that safeguards will be built in to protect all Ingram customers. But most independent booksellers remain up in arms.
"It's as if Wendy's and Burger King were suddenly forced into buying french fries from McDonald's," says Mitchell Kaplan, an independent bookseller, who owns Books & Books in Miami Beach.
And yet, there are dissenting voices in the industry, those who insist that the reverse is true - that thanks to new technology and economies of scale, the consumer book industry is actually on the brink of a change for the better. All that's really going on, says David Cully, president of distribution for Barnes & Noble, is a major shift. "I think the next five years are going to be very liberating for [book] customers and publishers."
The optimism proclaimed by Cully and others is being fed by a handful of developments, some so new it's not possible to calculate their ultimate impact. Among the most significant are:
Online shopping - Amazon.com now serves about 4.5 million customers, an increase of about 377 percent over the space of a year. Barnesandnoble.com has also leapt into the fray, hoping to gain its own franchise.
For small and specialized publishing companies, online sales are a dream come true. Suddenly, their wares are easily accessible to a group of consumers who might never have found them otherwise. Jed Lyons, president of the National Book Network, says his small publishing group saw a 20 percent increase in volume last year, largely due to online sales.
"We always knew how to reach a professor of history through direct mail," Mr. Lyons says. "But the senior vice president of a plastics extruding molding company in Cleveland who also happens to be a Civil War buff we never knew how to find. Now, he can find us."
Breadth of selection - Between online services and the rise of megastores, even customers living outside major metropolitan areas now have a greater variety of books available at their fingertips. Contrary to popular perception, says Alan Kahn, chief operating officer of Barnes & Noble, only 3 to 4 percent of the company's sales are bestsellers. The bulk of the chain's sales are actually books published earlier and now backlisted. At Amazon.com, vice president of merchandising Mary Morouse says these backlisted volumes - older books from both large and small publishers - are getting a boost from online sales. "We're penetrating [publishers'] entire lists, going way into their backlists, and they're not used to that depth of demand."
Also, keeping superstores stocked with as many as 175,000 titles means dealing with more than the top tier of large publishers. In fact, says Cully, that's been one of the biggest changes for Barnes & Noble. Four years ago, he says, the company did 75 percent of its business with the 10 highest-volume publishers; today, that figure has dropped to 47 percent.
Print-on-demand - Barnes & Nobles has also purchased Lightning Print, a print-on-demand publisher in Nashville, Tenn. Print-on-demand publishers store books electronically and can print single copies of hard-to-find books - or even individual chapters. Previously, publishers believed that unless a book could sell at least 1,000 copies, printing it wouldn't be profitable. Print-on-demand could make it profitable at 250.
At the same time, while online sales and print-on-demand publishing may be widening, consumer book sales rose only 1 percent last year.
But, points out Matt Miller, a general manager at Denver's venerable Tattered Cover independent bookstore, "if there were no market for books, there wouldn't be this battle going on."