Читать книгу Merchants of Culture - John B. Thompson - Страница 21

The transformation of the retail landscape in the United States was mirrored by similar changes in the UK; most of the players were different, some of the customary practices were peculiarly British and the consequences were in some respects more radical, but the overall pattern was the same. For most of the twentieth century, the British book trade had been regulated by the Net Book Agreement – an informal arrangement between publishers and booksellers that had been proposed by Macmillan in the 1890s following a period of turmoil and intensive price competition in the publishing industry.²⁴ The Agreement was based on the idea that publishers would set a fixed or ‘net’ retail price for each book they published; booksellers would agree to sell the books at the net price in return for a discount that would enable them to make a reasonable margin. Any bookseller who broke the rules would not be supplied on trade terms by the publishers. The Agreement came into force on 1 January 1900 and remained in place for nearly the whole of the twentieth century, creating a relatively stable commercial environment for publishers and booksellers.

The NBA was not without its critics, however, and it was challenged on numerous occasions. In 1959 it was referred to the Restrictive Practices Court, a special tribunal that had been established by the Restrictive Trade Practices Act of 1956, and the case was heard in 1962.²⁵ The Registrar of Restrictive Trading Agreements argued that the NBA was an illegal price-fixing cartel which acted against the public interest, whereas the publishers and booksellers associations argued that, given the cultural and educational value of books, it was in the public interest to have a wide network of stock-holding bookstores and that this would be destroyed if underselling were allowed, leading to a decline in the quality and quantity of books published. The Chairman of the Court ruled in favour of the publishers and booksellers and the NBA survived.

The reprieve, however, was only temporary. The NBA faced renewed pressure in the early 1990s from a number of retailers and consumer publishers who wanted to experiment with discounting in the hope that lower prices would drive a higher volume of sales. Terry Maher, head of the Pentos retail group which had acquired Dillons – an academic bookseller with its main store in Gower Street, London and a couple of small campus bookshops – in 1977 and begun to roll out a national chain of bookstores in the late 1980s, had always opposed the NBA. ‘I just thought the Net Book Agreement was stupid – it was an irritant,’ he recalled. ‘When we had a few shops, it didn’t matter that much, but once we had a national chain and we were branding Dillons nationally, it became more of an irritant.’²⁶ Dillons began experimenting with price promotions in 1989, including an attempt – cut short by an injunction secured by the Publishers Association – to discount the titles shortlisted for the 1990 Booker Prize. In 1991 Reed Consumer Books withdrew from the Agreement – the first of the major publishers to do so – and in August 1994 the Director General of the Office of Fair Trading decided that the NBA should be reviewed again by the Restrictive Practices Court. A period of confusion and uncertainty followed. In September the Publishers Association announced that it would defend the NBA and the following day Tim Hely Hutchinson – then CEO (chief executive officer) of Hodder Headline – announced that he was going to de-net their books on the day after Christmas. In September 1995 Random House and HarperCollins both announced that they would no longer be bound by the Agreement, and shortly after the retailer WH Smith – previously one of the staunchest defenders of the NBA – announced a major de-netted promotion with them. The NBA was effectively dead. In March 1997 the Restrictive Practices Court sealed the coffin by ruling that the NBA was illegal. From this point on, retailers were free to discount books and to sell them at any price they chose.

Prior to the dissolution of the NBA, Britain had experienced the growth of book retailing chains in a way that was somewhat similar to the US. In the 1970s and before, WH Smith, the general high-street bookseller, newsagent and stationer, was the most important player in the retail book market in Britain. Originally established as a wholesale newsagent and stationer in London’s East End at the end of the eighteenth century, WH Smith had expanded rapidly in the nineteenth century thanks to a series of exclusive deals with the major railway companies to operate bookstalls in railway stations.²⁷ By the 1970s WH Smith probably controlled as much as 40 per cent of the retail book market in the UK. The rest of the market was accounted for by some well-established, traditional independent booksellers, like Hatchards of Piccadilly, a few small chains like Blackwell and Hammicks and a plethora of small independent bookstores. Unlike the United States, Britain had not experienced the rise of mall bookstore chains in the 1960s and 1970s, as this phenomenon was linked to the social geography of the American city, with the migration of the middle classes to the suburbs and the growth of the suburban shopping malls based on high levels of car ownership.

The bookselling environment in Britain began to change significantly in the 1980s, thanks in large part to the rapid rise of Waterstone’s and Dillons. Tim Waterstone joined WH Smith in the late 1970s but was sacked in 1982. At the time he had been working on a paper on bookselling in Britain and had come up with a plan for a new kind of bookstore – ‘a store which would have an extraordinarily well-informed inventory, extraordinarily well-informed staff and a sort of messianic desire to sell books, independent bookselling at its best, but to have them as a chain,’ as he put it. He managed to raise £6,000 to open his first bookstore in the Old Brompton Road in London, and then raised further finance to roll out a chain of stores across the country. These were large bookstores in central, high-street locations, filled with huge amounts of stock including many backlist titles and designed in ways that were attractive to customers and conducive to browsing. The stores were similar in conception and design to the superstores that were being opened by Barnes & Noble and Borders in the US in the 1980s but the idea appears to have been developed independently.²⁸ While Waterstone’s was actively expanding its national network, the Pentos Group began, from 1986 on, to roll out a national chain of bookstores under the Dillons brand; by 1989 it was operating 61 bookstores across the country. A third chain was started up in 1987 by James Heanage, an entrepreneur with a background in advertising who had spotted an opportunity to develop a network of attractive, well-run bookstores in small and medium-sized towns in southern England; the first two Ottakar’s bookstores were opened in Brighton and Banbury in 1988 and the chain continued to expand over the next decade. By the end of the 1980s, there were two major bookselling chains rolling out stores nationwide and a third chain opening bookstores in the smaller towns and cities of southern England. The volume of retail space for books was expanding rapidly and dramatically. All three chains were competing against one another and taking market share away from WH Smith. They were also forcing many independents out of business, partly through predatory activities and partly because many of the independents were poorly run businesses which simply could not compete with much larger and more professionally run bookstores, just as in the US.

The rivalry between Waterstone’s and Dillons was brought to an end in the course of the 1990s, when the UK book retail sector underwent a process of consolidation. In 1993 Tim Waterstone sold the company to his former employer, WH Smith, for £49 million and the business was integrated with 48 Sherratt & Hughes stores, which were converted into the Waterstone’s brand. As an autonomous business within the WH Smith Group, Waterstone’s expanded rapidly and became the leading specialist bookseller in the UK. In 1998 Waterstone’s was sold to the HMV Media Group, which had been set up, under the chairmanship of Tim Waterstone, by the music corporation EMI and an American venture capital group called Advent, in order to acquire Waterstone’s and merge it with Dillons. HMV had bought Dillons in 1995 when the Pentos Group, which owned Dillons at the time, was declared bankrupt. The HMV Media Group paid £300 million for 115 Waterstone’s stores and £500 million for EMI’s two chains – 78 Dillons stores and 271 HMV music stores. For a year the two rival bookselling brands were maintained, but in 1999 the Dillons name was dropped and the stores were rebranded as Waterstone’s. In 2002, the HMV Group operated 197 Waterstone’s stores, mostly in the UK and Ireland, as well as 328 HMV stores selling music, videos and games. WH Smith also expanded its holdings in the 1990s, using the proceeds from its sale of Waterstone’s to acquire the 232 stores of the Scottish-based John Menzies chain in 1998, bringing the total number of branches in WH Smith’s high-street and travel chains to 741.

By the end of the 1990s, the absorption of Dillons into Waterstone’s had put the newly expanded Waterstone’s in a dominant position in the UK book retail market, but it also marked the beginning of a period of change for the retail giant. HMV’s music stores were very successful at the time, and the management at HMV decided to apply to Waterstone’s some of the retailing principles that had worked so well for the music stores – including a greater emphasis on campaigns and front-of-store promotions, higher stock turn and reducing the range of inventory. It was a model that went against the grain of Tim Waterstone’s conception of bookselling: ‘HMV wanted to go into the mid-market, to reproduce in the book market what they had so brilliantly done in the music market. But it just did not work in books, and I didn’t even want to try it in books,’ he explained. ‘Waterstone’s depends on heavy inventory, it depends on heavy investment in stock, it depends on the quality of its backlist. If you start dragging the inventory out, what you’re doing is dragging out the backlist. And once you start dragging out the backlist, the whole character of the bookselling changes. You’re left with a frontlist, and if you’re left with a frontlist then you’re led into a discount war.’ In 2001 Tim Waterstone resigned as chairman.

In the late 1990s and early 2000s, Waterstone’s also faced threats from new players who entered the market. In 1997 the US-based Borders Group expanded into the UK by acquiring Books Etc.; within five years Borders was operating 37 Books Etc. stores and 21 superstores in the UK and had become one of Waterstone’s major competitors. But the overseas expansion of Borders didn’t last; Borders sold the UK business in 2007, as noted earlier, and all its stores in the UK were closed down in 2009.

The other US-based book retailer who entered the UK market proved to be more resilient. Having acquired the British online bookseller Bookpages in 1998, Amazon quickly expanded its presence in the UK and took a growing share of the market. By 2006 internet booksellers had captured around 11 per cent of the retail book market in the UK – the same share as in the US – and Amazon was overwhelmingly the largest player. While Amazon sells across the whole range of books, it is particularly well suited to selling the more specialized books and older backlist titles, thus eroding the revenue that Waterstone’s and other bricks-and-mortar bookstores were able to generate from backlist sales.

The other set of key players that entered the British retail book market in the late 1990s were the supermarkets – Tesco, Asda and Sainsbury’s. It was the collapse of the Net Book Agreement in the mid-1990s that cleared the way for the entry of the supermarkets into the retail book market. Prior to that, the supermarkets had been largely uninterested in bookselling; the only books they sold were bargain books. The reason was simple. For supermarkets, the ability to compete on price is crucial – it is one of the key ways they are able to secure competitive advantage vis-à-vis other retailers. So long as the Net Book Agreement was in place, the ability to use price as a competitive tool for the sale of books was simply not available to them. However, once the NBA had gone, books became an attractive addition to the non-food mix of the large supermarkets. Part of the strategic aim of large supermarkets like Tesco was to grow non-food to be as strong as food, and non-food ‘can be funerals, it can be garden centres or whatever we’re going into now,’ explained one former buyer for Tesco. ‘Books were seen to be part of entertainment and part of consumer’s disposable income.’ But the supermarkets had to be able to sell the books at prices that were sufficiently low that ‘it’s not considered a purchase any more – it’s, you know, stick it in the basket.’ Once the NBA had collapsed, the supermarkets could negotiate terms with publishers that would enable them to discount heavily and achieve the kinds of prices they felt they needed to make books a ‘stick it in the basket’ good. And books had some additional advantages for the supermarkets. They were one of the few goods that could be returned to the supplier if they didn’t sell, thus protecting the retailer from the risk of being left with lots of unsold stock on the shelves. And they were one of the few products in a supermarket sold with a recommended retail price printed on it, so shoppers could see how much cheaper they were able to buy it at the supermarket.

The supermarkets started with paperbacks, and then three or four years later began to move into frontlist hardcovers and children’s books. So in the course of the late 1990s, a diversified book offering evolved within the supermarkets. The major supermarket chains brought in specialized book buyers who worked at the head offices and were visited regularly by sales reps from the major publishing houses. The buyer’s priority was ‘chart’ – that is, books that were either on, or were likely to make it on to, the paperback or hardcover bestseller lists. The supermarkets watched the bestseller lists produced by newspapers like the Sunday Times but they also produced their own bestseller lists, based on their own sales records. Even the largest supermarket stores had a limited amount of shelf space devoted to books, so the buyer had a small number of slots – maybe six or twelve slots, depending on the store – which could be filled with new titles every two weeks. Titles move up and down the chart and they stay on the shelves so long as they’re selling. If the book continues to sell well it will be kept on the shelves – ‘Something like Martina Cole could be there for eight months.’ But if the sales fall off or are simply too low, the title is pulled out of the stores and returned to the publisher.

The impact of these changes in the retail landscape in Britain in the late 1990s and early 2000s was dramatic. For trade publishers, the changes meant that a declining proportion of their sales was coming through traditional book retail outlets and a growing proportion was coming through non-traditional outlets, especially the supermarkets. This can be seen from table 4, which gives the breakdown of sales by channel for a major UK trade house in 2000 and 2006. In 2000, Waterstone’s and Ottakar’s together accounted for 28 per cent of sales; by 2006, their joint share had fallen to 23 per cent. (In 2006 Waterstone’s bought Ottakar’s; they are grouped together here for both 2000 and 2006 in order to establish a common point of comparison.) WH Smith’s share fell slightly from 13 per cent in 2000 to 12 per cent in 2006. Other chains, including Borders, Books Etc., Blackwell and others, accounted for 11 per cent in both years. Independents’ share fell significantly, from 8 per cent in 2000 to a mere 3 per cent in 2006. Wholesalers fell from 14 per cent to 9 per cent. By contrast, internet sales – and these are overwhelmingly Amazon – rose from 2 per cent in 2000 to 7 per cent in 2006; even these figures probably underestimate the real volume and increase in online retail sales, since Amazon and other online retailers acquire some of their stock from wholesalers. However, the most striking percentages in this table are those indicating sales through the supermarkets, which doubled from 12 per cent in 2000 to 25 per cent in 2006. For this trade house, sales through the supermarkets accounted for a quarter of their sales in 2006, and the supermarkets had overtaken Waterstone’s in terms of sales volume. Moreover, whereas Waterstone’s share was declining over time, the share accounted for by online retail (Amazon) and by the supermarkets was increasing rapidly. These non-traditional outlets were the growth areas for this and other trade publishers, whereas the traditional bricks-and-mortar booksellers were either static or declining as sales channels.

Table 4 Sales by channel for a major UK trade publisher, 2000 and 2006

Channel	2000 (%)	2006 (%)
Waterstone’s/Ottakar’s	28	23
WH Smith	13	12
Other chains	11	11
Independents	8	3
Wholesalers	14	9
Library	4	2
Travel	8	9
Internet	2	7
Supermarkets	12	25

In June 2011 the HMV Group announced the sale of Waterstone’s to the Russian billionaire Alexander Mamut for £53 million. HMV was facing serious financial difficulties, with declining sales and high levels of borrowing, and the sale of Waterstone’s was part of a broader strategy aimed at reducing its overall debt and securing new lending agreements with its creditors. The new owner of Waterstone’s installed James Daunt as managing director. As the founder of Daunt Books, a small independent bookselling chain in London, Daunt had forged a reputation for running attractive, high-quality bookstores that served a loyal customer base. Managing a large nationwide chain of bookstores that face growing pressure from the supermarkets, from Amazon and from the growth of ebook sales will be a challenge of an altogether different order.

We shall return in later chapters to the consequences of these enormous changes in the retail landscape of bookselling in the United States and Britain. But first we must examine the other structural transformations of the publishing field.

1 ¹ See Laura J. Miller, Reluctant Capitalists: Bookselling and the Culture of Consumption (Chicago: University of Chicago Press, 2006), ch. 2.

2 ² Ibid., p. 35.

3 ³ Ibid.

4 ⁴ Epstein, Book Business, pp. 103ff.

5 ⁵ ‘Frontlist’ refers to new and recently published books. A title is commonly treated as frontlist for up to 12 months, after which it becomes a backlist title.

6 ⁶ See Stephen Horvath, ‘The Rise of the Book Chain Superstore’, Logos, vol. 7, no. 1 (1996), p. 43.

7 ⁷ Stephanie Oda and Glenn Sanislo, The Subtext 2007–2008 Perspective on Book Publishing: Numbers, Issues and Trends (Darien, Conn.: Open Book, 2007), p. 67.

8 ⁸ Ibid., p. 64.

9 ⁹ Whiteside, The Blockbuster Complex, p. 41.

10 ¹⁰ See Ted Striphas, The Late Age of Print: Everyday Book Culture from Consumerism to Control (New York: Columbia University Press, 2009), p. 56. Striphas points out that in 1997 the ABA estimated that there were around 12,000 independent retail bookstores in business in the US; ABA members would have accounted for less than a third of these.

11 ¹¹ Oda and Sanislo, The Subtext 2007–2008 Perspective, p. 64.

12 ¹² For a full account of the legal challenges, see the excellent discussion in Miller, Reluctant Capitalists, ch. 7.

13 ¹³ Ibid., pp. 179–80.

14 ¹⁴ Ibid., p. 180.

15 ¹⁵ Co-op advertising is a cost-sharing arrangement between the publisher and the retailer in which the publisher pays for part of the retailer’s promotion costs. This is discussed in more detail in ch. 7.

16 ¹⁶ Epstein, Book Business, p. 103.

17 ¹⁷ See Epstein, Book Business, ch. 2.

18 ¹⁸ Robert Spector, Amazon.com: Get Big Fast (London: Random House, 2000), p. 216.

19 ¹⁹ Oda and Sanislo, The Subtext 2007–2008 Perspective, p. 64.

20 ²⁰ Used-Book Sales: A Study of the Behavior, Structure, Size, and Growth of the US Used-Book Market (New York: Book Industry Study Group, 2006), p. 9.

21 ²¹ Charles Fishman, The Wal-Mart Effect: How an Out-of-Town Superstore Became a Superpower (London: Penguin, 2006), p. 6.

22 ²² Ibid., pp. 5–6.

23 ²³ The retail book market represents only part of total book sales. US sales for all books, including tests for the educational market, were $38.08 billion in 2006, an increase of 3.1 per cent from 2005. Unit sales for all books (excluding tests) were flat in 2006 – 3.1 billion units, an increase of 0.5 per cent from 2005. See Oda and Sanislo, The Subtext 2007–2008 Perspective, p. 1.

24 ²⁴ See John Feather, A History of British Publishing, 2nd edn (London: Routledge, 2006), pp. 100–2.

25 ²⁵ Ibid., p. 202.

26 ²⁶ Terry Maher, in Sue Bradley (ed.), The British Book Trade: An Oral History (London: British Library, 2008), p. 228. For a full account of Maher’s campaign against the Net Book Agreement, see Terry Maher, Against My Better Judgement: Adventures in the City and in the Book Trade (London: Sinclair-Stevenson, 1994), ch. 4.

27 ²⁷ Feather, A History of British Publishing, p. 94.

28 ²⁸ Tim Waterstone had spent some time in New York when he was working for WH Smith in the late 1970s and was familiar with Barnes & Noble, but at that time Barnes & Noble was known primarily for its large discount store on Fifth Avenue and had not begun to roll out its book superstores. ‘I wasn’t looking at Barnes & Noble and Borders in the 1980s, not at all,’ he recalled. ‘I was just obsessed with what I was doing here, frankly.’