But that doesn’t mean every book is going to be a best-selling literary great.

Watch below and absorb the things you should be thinking to yourself as you set out on your novel writing adventure. But understand, often the reward is going to be the adventure itself… and the knowledge that in your life you wrote and published a novel. Even today, not many people can say that.

I’m not saying to forget about looking for an agent, or that sweet publishing deal. But a fair hit of reality is good to take in, and this video – even in it’s cartoon silliness – offers that.

I hope it helps you more than it scares you off!

A Solution for Capital-Starved Independent Bookstores

The following is a proposal made by Jack McKeown, former president and CEO of the Perseus Books Group and former president and publisher of the Adult Trade Group at HarperCollins. Currently he is director of business development for Verso Digital, the first vertical ad network for book publishers, and is president of Conemarra Partners, a media consultancy.

Last week brought the depressing news that Seattle’s Elliott Bay bookstore is in financial distress and may be forced to relocate from its Pioneer Square home of the last 36 years. Facing an expiring lease and a maxed-out credit line, owner Peter Aaron said, “Finding a lender to keep us liquid is an ongoing battle.” This has become an all-too-familiar story, of course. Securing adequate investment and working capital, never an easy task for independent bookstores, has been elevated to crisis proportions by the current recession. Is there a solution–one that could help independent bookstores maintain their local competitive advantage and even promote their expansion for years to come?
The Background

From my many years as a publishing executive, I always have believed that turbulent times in our industry foster opportunity as well as dislocation. The concept that I am floating is not especially complicated, but it does require a leap of imagination and strong leadership at the national level.

A thriving neighborhood bookstore is recognized as a key element in the social, cultural and economic fabric of any community. This is an opinion widely shared by urban planners, government planning boards, Smart Growth advocates and real-estate developers around the country. They will tell you that a bookstore offers a tremendous public amenity that should be built into the master plan of any new development or neighborhood revitalization. Primarily it has been the national chains that have been the beneficiaries of this perception, and their superior access to capital is a fundamental reason why.

But with the recession, chain-store expansion has ground to a halt and a period of contraction almost certainly will follow. (Barnes & Noble COO Mitch Klipper confirmed as much in an investor presentation last week.) This is part of a larger, radical reshaping of America’s retail landscape. More than 400 of the 2,000 largest U.S. malls have closed in the past two years and data suggest that at least another 1,000 are in distress. This represents an acceleration of a trend already underway before the recession took root. Main Street retail was decimated when the malls exploded decades ago, but may well rebound with a tidal wave of mall closures. “One of the biggest consequences of mall closings is the loss of a sense of community, a place where people gather and socialize,” said David Birnbey of the Shopping Center Group, as quoted in “The Vanishing Shopping Mall.” Can independent bookstores be positioned to help fill the vacuum as commercial real estate markets begin their gradual recovery?

The Concept

Essentially, my concept advances a sustainability and neighborhood redevelopment argument, with the independent bookstore at its center. I would like to propose the creation of a Neighborhood Bookstore Development Bank (NBDB). It is inspired by such special-purpose investment vehicles as the Fresh Food Financing Initiative (FFFI)–a successful five-year-old loan program for independent, neighborhood grocery stores. It also incorporates some of the mechanisms behind the proposed National Infrastructure Bank, as described by Felix Rohatyn and Everett Ehrlich in their October 2008 article for the New York Review of Books (“A New Bank to Save Our Infrastructure”).

The NBDB would be structured as a private investment bank, i.e., as an entity that evaluates project proposals and assembles a portfolio of investments to fund them. It would look to a prominent trade organization, such as the American Booksellers Association, to provide leadership in the form of a mission charter and board memberships, but otherwise would operate at arms-length. At the heart of the concept is a NBDB Commission, a committee of experts who would evaluate proposals to provide loans to existing or start-up bookstores on a case-by-case basis. The ABA would assist individual bookstores in assembling their business plans, but the bank’s Commission would operate independently and with the highest transparency, in order to attract capital and maintain the bank on a sound economic foundation.

Mission of the NBDB

The NBDB’s core mission would be to promote the expansion of healthy independent bookstores and to provide start-up funds to new bookseller entrepreneurs, while simultaneously generating acceptable returns to the bank’s investors. Among its specific goals would be the following:

Support capital improvements and expansion of established bookstores
Assist established bookstores in converting from commercial rental to ownership of their storefronts
Promote the creation of new bookstores in underserved markets or as part of new real-estate developments
Convert buildings to bookstores through adaptive reuse of historic structures, acquisitions of distressed properties or by foreclosure sales
Support established bookstores in upgrading their systems and websites, and in creating or expanding their e-commerce capabilities
Finance the establishment of print-on-demand centers (e.g., Espresso Book Machines) within local bookstores to generate new revenue streams
A recommended balance of investments between existing and new stores would be 60/40–a conservative approach meant to mitigate some of the risk of a portfolio too heavily weighted toward start-ups.

Financing

The NBDB would be capitalized through an initial round of paid-in equity and then leveraged at a suggested conservative ratio of 3:1. So, for instance, $2.5 million in minimum seed capital would be leveraged to $10 million at the outset. The pool of initial investors could include the ABA itself, along with such interested players as the national wholesalers (e.g., Ingram and Baker & Taylor). These parties would stand to earn meaningful annual dividends as well as long-term appreciation on their investments.

All the while they would be supporting the growth of a core customer segment.

Additional seed capital could be secured from REITs (Real Estate Investment Trusts) and private equity companies, perhaps as part of larger real-estate development financings. Capital would be callable beyond the seed round, with the ultimate objective of achieving a ratio of $10 million: $40 million by year three. These sums may strike some observers as modest indeed, but their impact on creating a base of larger and healthier independent bookstores would be dramatic, considering the under-capitalized state of the business now.

Ultimately the bank’s loans would be packaged and sold in the secondary capital markets, timed to take advantage of the recovery. The NBDB also would tap into the federal government’s interest in stimulating capital investment in local, community-based development projects and in promoting sustainability. Government grants and guarantees could be part of the solution to jump-start the effort, as has been the case with the FFFI. In addition, the NBDB could provide an engine for private-public partnerships at the local level, including community-owned bookstore retail via chartered stock companies.

In conclusion, the NBDB could play a major role in changing the narrative on independent bookstores from one of decline to rebound. For an industry preoccupied with
the discussion surrounding e-books and e-readers, it may seem like a counterintuitive strategy. But that could well prove its strength. It would play into larger demographic patterns, such as the imminent retirement of 78 million baby boomers, the urban migration of younger age groups and the contraction of America’s malls. These trends point to the development of better bricks-and-mortar, neighborhood-centered retail. With adequate capital at their disposal, and equipped with strong business plans that meet the NBDB’s test, independent booksellers could reposition themselves for a brighter future.

Here is the response I sent to Shelf Awareness (it wasn’t published by them, however):

Jack McKeown’s proposal to establish a Neighborhood Bookstore Development Bank (NBDB) is very welcome, and his analysis of the exciting prospects for our industry is superb.

As Shorebank and Calvert Foundation have shown in their decades of work with Community Development Finance Institutions worldwide, socially motivated investors can shift economic landscapes while earning solid returns. Calvert’s “Community Investment Notes” have in fact performed better during this recession than most other financial instruments. Jack’s proposed NBDB would among other beneficial effects, assist CDFIs and other potential partner institutions to evaluate and supervise bookstore loans they could make on their own to our critical but poorly understood sector of the American economy.

I would recommend, however, that Jack’s banking concept be supplemented with a coordinated apprenticeship initiative modeled on Grameen Bank’s Grameen Trust Replication Program, that has helped seed the world with hundreds of self-sustaining microfinance institutions (MFIs) over the past two decades.

MFIs specialize in making very tiny loans to very poor families, using loan-interest to fund operations expense. Grameen Trust Replication Program invites prospective MFI founders (microlenders) to spend significant time observing and participating in the operation of Grameen Bank, in Bangladesh. These prospective microlenders are then invited to apply for grant/loan combination packages. Upon approval of start-up funding, the new microlenders become part of a loose, international Grameen support network. Taking a similar “apprenticeship plus capital” approach to stimulating the growth of U.S. independent bookselling could help ensure that individuals wishing to launch new independent bookstores obtain a salutary mix of investment capital, debt, education and ongoing professional support.

Andy Laties, author, “Rebel Bookseller: How To Improvise Your Own Indie Store And Beat Back The Chains”

1.

At a hearing on Capitol Hill in May, James Moroney, the publisher of the Dallas Morning News, told Congress about negotiations he’d just had with the online retailer Amazon. The idea was to license his newspaper’s content to the Kindle, Amazon’s new electronic reader. “They want seventy per cent of the subscription revenue,” Moroney testified. “I get thirty per cent, they get seventy per cent. On top of that, they have said we get the right to republish your intellectual property to any portable device.” The idea was that if a Kindle subscription to the Dallas Morning News cost ten dollars a month, seven dollars of that belonged to Amazon, the provider of the gadget on which the news was read, and just three dollars belonged to the newspaper, the provider of an expensive and ever-changing variety of editorial content. The people at Amazon valued the newspaper’s contribution so little, in fact, that they felt they ought then to be able to license it to anyone else they wanted. Another witness at the hearing, Arianna Huffington, of the Huffington Post, said that she thought the Kindle could provide a business model to save the beleaguered newspaper industry. Moroney disagreed. “I get thirty per cent and they get the right to license my content to any portable device—not just ones made by Amazon?” He was incredulous. “That, to me, is not a model.”

Had James Moroney read Chris Anderson’s new book, “Free: The Future of a Radical Price” (Hyperion; $26.99), Amazon’s offer might not have seemed quite so surprising. Anderson is the editor of Wired and the author of the 2006 best-seller “The Long Tail,” and “Free” is essentially an extended elaboration of Stewart Brand’s famous declaration that “information wants to be free.” The digital age, Anderson argues, is exerting an inexorable downward pressure on the prices of all things “made of ideas.” Anderson does not consider this a passing trend. Rather, he seems to think of it as an iron law: “In the digital realm you can try to keep Free at bay with laws and locks, but eventually the force of economic gravity will win.” To musicians who believe that their music is being pirated, Anderson is blunt. They should stop complaining, and capitalize on the added exposure that piracy provides by making money through touring, merchandise sales, and “yes, the sale of some of [their] music to people who still want CDs or prefer to buy their music online.” To the Dallas Morning News, he would say the same thing. Newspapers need to accept that content is never again going to be worth what they want it to be worth, and reinvent their business. “Out of the bloodbath will come a new role for professional journalists,” he predicts, and he goes on:

There may be more of them, not fewer, as the ability to participate in journalism extends beyond the credentialed halls of traditional media. But they may be paid far less, and for many it won’t be a full time job at all. Journalism as a profession will share the stage with journalism as an avocation. Meanwhile, others may use their skills to teach and organize amateurs to do a better job covering their own communities, becoming more editor/coach than writer. If so, leveraging the Free—paying people to get other people to write for non-monetary rewards—may not be the enemy of professional journalists. Instead, it may be their salvation.

Anderson is very good at paragraphs like this—with its reassuring arc from “bloodbath” to “salvation.” His advice is pithy, his tone uncompromising, and his subject matter perfectly timed for a moment when old-line content providers are desperate for answers. That said, it is not entirely clear what distinction is being marked between “paying people to get other people to write” and paying people to write. If you can afford to pay someone to get other people to write, why can’t you pay people to write? It would be nice to know, as well, just how a business goes about reorganizing itself around getting people to work for “non-monetary rewards.” Does he mean that the New York Times should be staffed by volunteers, like Meals on Wheels? Anderson’s reference to people who “prefer to buy their music online” carries the faint suggestion that refraining from theft should be considered a mere preference. And then there is his insistence that the relentless downward pressure on prices represents an iron law of the digital economy. Why is it a law? Free is just another price, and prices are set by individual actors, in accordance with the aggregated particulars of marketplace power. “Information wants to be free,” Anderson tells us, “in the same way that life wants to spread and water wants to run downhill.” But information can’t actually want anything, can it? Amazon wants the information in the Dallas paper to be free, because that way Amazon makes more money. Why are the self-interested motives of powerful companies being elevated to a philosophical principle? But we are getting ahead of ourselves.

2.

Anderson’s argument begins with a technological trend. The cost of the building blocks of all electronic activity—storage, processing, and bandwidth—has fallen so far that it is now approaching zero. In 1961, Anderson says, a single transistor was ten dollars. In 1963, it was five dollars. By 1968, it was one dollar. Today, Intel will sell you two billion transistors for eleven hundred dollars—meaning that the cost of a single transistor is now about .000055 cents.

Anderson’s second point is that when prices hit zero extraordinary things happen. Anderson describes an experiment conducted by the MIT behavioral economist Dan Ariely, the author of “Predictably Irrational.” Ariely offered a group of subjects a choice between two kinds of chocolate—Hershey’s Kisses, for one cent, and Lindt truffles, for fifteen cents. Three-quarters of the subjects chose the truffles. Then he redid the experiment, reducing the price of both chocolates by one cent. The Kisses were now free. What happened? The order of preference was reversed. Sixty-nine per cent of the subjects chose the Kisses. The price difference between the two chocolates was exactly the same, but that magic word “free” has the power to create a consumer stampede. Amazon has had the same experience with its offer of free shipping for orders over twenty-five dollars. The idea is to induce you to buy a second book, if your first book comes in at less than the twenty-five-dollar threshold. And that’s exactly what it does. In France, however, the offer was mistakenly set at the equivalent of twenty cents—and consumers didn’t buy the second book. “From the consumer’s perspective, there is a huge difference between cheap and free,” Anderson writes. “Give a product away, and it can go viral. Charge a single cent for it and you’re in an entirely different business… The truth is that zero is one market and any other price is another.”

Since the falling costs of digital technology let you make as much stuff as you want, Anderson argues, and the magic of the word “free” creates instant demand among consumers, then Free (Anderson honors it with a capital) represents an enormous business opportunity. Companies ought to be able to make huge amounts of money “around” the thing being given away—as Google gives away its search and e-mail and makes its money on advertising.

Anderson cautions that this philosophy of embracing the Free involves moving from a “scarcity” mind-set to an “abundance” mind-set. Giving something away means that a lot of it will be wasted. But because it costs almost nothing to make things, digitally, we can afford to be wasteful. The elaborate mechanisms we set up to monitor and judge the quality of content are, Anderson thinks, artifacts of an era of scarcity: we had to worry about how to allocate scarce resources like newsprint and shelf space and broadcast time. Not anymore. Look at YouTube, he says, the free video archive owned by Google. YouTube lets anyone post a vi
deo to its site free, and lets anyone watch a video on its site free, and it doesn’t have to pass judgment on the quality of the videos it archives. “Nobody is deciding whether a video is good enough to justify the scarce channel space it takes, because there is no scarce channel space,” he writes, and goes on:

Distribution is now close enough to free to round down. Today, it costs about $0.25 to stream one hour of video to one person. Next year, it will be $0.15. A year later it will be less than a dime. Which is why YouTube’s founders decided to give it away… The result is both messy and runs counter to every instinct of a television professional, but this is what abundance both requires and demands.

There are four strands of argument here: a technological claim (digital infrastructure is effectively Free), a psychological claim (consumers love Free), a procedural claim (Free means never having to make a judgment), and a commercial claim (the market created by the technological Free and the psychological Free can make you a lot of money). The only problem is that in the middle of laying out what he sees as the new business model of the digital age Anderson is forced to admit that one of his main case studies, YouTube, “has so far failed to make any money for Google.”

Why is that? Because of the very principles of Free that Anderson so energetically celebrates. When you let people upload and download as many videos as they want, lots of them will take you up on the offer. That’s the magic of Free psychology: an estimated seventy-five billion videos will be served up by YouTube this year. Although the magic of Free technology means that the cost of serving up each video is “close enough to free to round down,” “close enough to free” multiplied by seventy-five billion is still a very large number. A recent report by Credit Suisse estimates that YouTube’s bandwidth costs in 2009 will be three hundred and sixty million dollars. In the case of YouTube, the effects of technological Free and psychological Free work against each other.

So how does YouTube bring in revenue? Well, it tries to sell advertisements alongside its videos. The problem is that the videos attracted by psychological Free—pirated material, cat videos, and other forms of user-generated content—are not the sort of thing that advertisers want to be associated with. In order to sell advertising, YouTube has had to buy the rights to professionally produced content, such as television shows and movies. Credit Suisse put the cost of those licenses in 2009 at roughly two hundred and sixty million dollars. For Anderson, YouTube illustrates the principle that Free removes the necessity of aesthetic judgment. (As he puts it, YouTube proves that “crap is in the eye of the beholder.”) But, in order to make money, YouTube has been obliged to pay for programs that aren’t crap. To recap: YouTube is a great example of Free, except that Free technology ends up not being Free because of the way consumers respond to Free, fatally compromising YouTube’s ability to make money around Free, and forcing it to retreat from the “abundance thinking” that lies at the heart of Free. Credit Suisse estimates that YouTube will lose close to half a billion dollars this year. If it were a bank, it would be eligible for TARP funds.

3.

Anderson begins the second part of his book by quoting Lewis Strauss, the former head of the Atomic Energy Commission, who famously predicted in the mid-nineteen-fifties that “our children will enjoy in their homes electrical energy too cheap to meter.”

“What if Strauss had been right?” Anderson wonders, and then diligently sorts through the implications: as much fresh water as you could want, no reliance on fossil fuels, no global warming, abundant agricultural production. Anderson wants to take “too cheap to meter” seriously, because he believes that we are on the cusp of our own “too cheap to meter” revolution with computer processing, storage, and bandwidth. But here is the second and broader problem with Anderson’s argument: he is asking the wrong question. It is pointless to wonder what would have happened if Strauss’s prediction had come true while rushing past the reasons that it could not have come true.

Strauss’s optimism was driven by the fuel cost of nuclear energy—which was so low compared with its fossil-fuel counterparts that he considered it (to borrow Anderson’s phrase) close enough to free to round down. Generating and distributing electricity, however, requires a vast and expensive infrastructure of transmission lines and power plants—and it is this infrastructure that accounts for most of the cost of electricity. Fuel prices are only a small part of that. As Gordon Dean, Strauss’s predecessor at the AEC, wrote, “Even if coal were mined and distributed free to electric generating plants today, the reduction in your monthly electricity bill would amount to but twenty per cent, so great is the cost of the plant itself and the distribution system.”

This is the kind of error that technological utopians make. They assume that their particular scientific revolution will wipe away all traces of its predecessors—that if you change the fuel you change the whole system. Strauss went on to forecast “an age of peace,” jumping from atoms to human hearts. “As the world of chips and glass fibers and wireless waves goes, so goes the rest of the world,” Kevin Kelly, another Wired visionary, proclaimed at the start of his 1998 digital manifesto, New Rules for the New Economy, offering up the same non sequitur. And now comes Anderson. “The more products are made of ideas, rather than stuff, the faster they can get cheap,” he writes, and we know what’s coming next: “However, this is not limited to digital products.” Just look at the pharmaceutical industry, he says. Genetic engineering means that drug development is poised to follow the same learning curve of the digital world, to “accelerate in performance while it drops in price.”

But, like Strauss, he’s forgotten about the plants and the power lines. The expensive part of making drugs has never been what happens in the laboratory. It’s what happens after the laboratory, like the clinical testing, which can take years and cost hundreds of millions of dollars. In the pharmaceutical world, what’s more, companies have chosen to use the potential of new technology to do something very different from their counterparts in Silicon Valley. They’ve been trying to find a way to serve smaller and smaller markets—to create medicines tailored to very specific subpopulations and strains of diseases—and smaller markets often mean higher prices. The biotechnology company Genzyme spent five hundred million dollars developing the drug Myozyme, which is intended for a condition, Pompe disease, that afflicts fewer than ten thousand people worldwide. That’s the quintessential modern drug: a high-tech, targeted remedy that took a very long and costly path to market. Myozyme is priced at three hundred thousand dollars a year. Genzyme isn’t a mining company: its real assets are intellectual property—information, not stuff. But, in this case, information does not want to be free. It wants to be really, really expensive.

And there’s plenty of other information out there that has chosen to run in the opposite direction from Free. The Times gives away its content on its Web site. But the Wall Street Journal has found that more than a million subscribers are quite happy to pay for the privilege of reading online. Broadcast television—the original practitioner of Free—is struggling. But premium cable, with its stiff monthly charges for specialty content, is doing just fine. Apple may soon make more money selling iPhone downloads (ideas) than it does from the iPhone itself (stuff). The company could one day give away the iPhone to boost downloads; it could give away the downloads to boost iPhone sales; or it could continue to do wh
at it does now, and charge for both. Who knows? The only iron law here is the one too obvious to write a book about, which is that the digital age has so transformed the ways in which things are made and sold that there are no iron laws.

Q: Has your opinion of e-readers changed?

A: I’m sure there will always be dedicated devices, and they may have a few advantages in doing just one thing. But I think the general-purpose devices will win the day because I think people just probably aren’t willing to pay for a dedicated device. You notice Amazon never says how much they sell; usually if they sell a lot of something, you want to tell everybody.

We don’t see that it’s a really big market at this point. And in the future, the more general-purpose devices will tend to win the day.

I’m not sure that Amazon, as an example, really cares that much about being in the hardware business. If I were Amazon, I’d love selling stuff where I didn’t have to have a warehouse, didn’t need UPS.

GET THE GOODS ON THE INDIE WORLD. GET CANTARANEWS.

Beginning in November, Amazon will begin offering free downloads of Kindle for PC, an e-reading application that will allow consumers to download Kindle edition e-books to any PC running Windows 7, Windows XP or Windows Vista and read them on the PC. While the new application will allow Kindle owners to read their previously purchased Kindle titles on their PCs, it will also allow anyone with a PC to buy and download Kindle e-books directly to their PCs.

The Kindle for PC application follows Barnes & Noble’s launch of its digital reading device, called the Nook, a wireless-enabled reading device that will allow its owners to read their e-books on different devices and even to share them with other consumers. In fact, as the e-book market moves toward open platforms and away from proprietary formats, Amazon has stepped up its efforts to allow Kindle owners more flexibility to read their e-books (Kindle is a proprietary format) on other devices. First, Amazon developed the popular Kindle on iPhone/iPod Touch, and now this PC application. No word yet on a Kindle for Mac app.

The Kindle for PC software will also synchronize bookmarks and the last page read between the Kindle and the PC. PCs with Windows 7 will allow the user to use a finger-pinch to scale the text up or down and to turn pages with a finger swipe. The online retailer says it offers more than 360,000 Kindle format e-books for sale through the Kindle and the Kindle Web site on Amazon.

GET THE GOODS ON THE INDIE WORLD. GET CANTARANEWS.

The Board of Directors of the American Booksellers Association today sent the following letter to the US Department of Justice requesting that it investigate practices by Amazon.com, Wal-Mart, and Target that it believes constitute illegal predatory pricing that is damaging to the book industry and harmful to consumers.

VIA OVERNIGHT MAIL AND E-MAIL

October 22, 2009

The Honorable Christine Varney
Assistant Attorney General
Antitrust Division
U.S. Department of Justice
950 Pennsylvania Avenue, NW, Suite 3109
Washington, DC 20530

Molly Boast, Esquire
Deputy Assistant Attorney General for Civil Matters
Antitrust Division
U.S. Department of Justice
950 Pennsylvania Avenue, NW, Room 3210
Washington, DC 20530

Dear Ms. Varney and Ms. Boast,

We are writing on behalf of the American Booksellers Association, a 109-year-old trade organization representing the nation’s locally owned, independent booksellers. A core part of our mission is devoted to making books as widely available to American consumers as possible. We ask that the Department of Justice investigate practices by Amazon.com, Wal-Mart, and Target that we believe constitute illegal predatory pricing that is damaging to the book industry and harmful to consumers. We are requesting a meeting with you to discuss this urgent issue at your earliest possible opportunity.

As reported in the consumer and trade press this past week, Amazon.com, WalMart.com, and Target.com have engaged in a price war in the pre-sale of new hardcover bestsellers, including books from John Grisham, Stephen King, Barbara Kingsolver, Sarah Palin, and James Patterson. These books typically retail for between $25 and $35. As of writing of this letter, all three competitors are selling these and other titles for between $8.98 and $9.00.

Publishers sell these books to retailers at 45%-50% off the suggested list price. For example, a $35 book, such as Mr. King’s Under the Dome, costs a retailer $17.50 or more. News reports suggest that publishers are not offering special terms to these big box retailers, and that the retailers are, in fact, taking orders for these books at prices far below cost. (In the case of Mr. King’s book, these retailers are losing as much as $8.50 on each unit sold.) We believe that Amazon.com, Wal-Mart, and Target are using these predatory pricing practices to attempt to win control of the market for hardcover bestsellers.

It’s important to note that the book industry is unlike other retail sectors. Clothing, jewelry, appliances, and other commercial goods are typically sold at a net price, leaving the seller free to determine the retail price and the margin these products will earn. Because publishers print list prices indelibly on jacket covers, and because books are sold at a discount off that retail price, there is a ceiling on the amount of margin a book retailer can earn.

The suggested list price set by the publisher reflects manufacturing costs—acquisition, editing, marketing, printing, binding, shipping, etc—which vary significantly from book to book. By selling each of these titles below the cost these retailers pay to the publishers, and at the same price as each other, and at the same price as all other titles in these pricing schemes, Amazon.com, Wal-Mart, and Target are devaluing the very concept of the book. Authors and publishers, and ultimately consumers, stand to lose a great deal if this practice continues and/or grows.

What’s so troubling in the current situation is that none of the companies involved are engaged primarily in the sale of books. They’re using our most important products—mega bestsellers, which, ironically, are the most expensive books for publishers to bring to market—as a loss leader to attract customers to buy other, more profitable merchandise. The entire book industry is in danger of becoming collateral damage in this war.

It’s also important to note that this episode was precipitated by below-cost pricing of digital editions of new hardcover books by Amazon.com, many of those titles retailing for $9.99, and released simultaneously with the much higher-priced print editions. We believe the loss-leader pricing of digital content also bears scrutiny.

While on the surface it may seem that these lower prices will encourage more reading and a greater sharing of ideas in the culture, the reality is quite the opposite. Consider this quote from Mr. Grisham’s agent, David Gernert, that appeared in the New York Times:

“If readers come to believe that the value of a new book is $10, publishing as we know it is over. If you can buy Stephen King’s new novel or John Grisham’s ‘Ford County’ for $10, why would you buy a brilliant first novel for $25? I think we underestimate the effect to which extremely discounted best sellers take the consumer’s attention away from emerging writers.”

For our members—locally owned, independent bookstores—the effect will be devastating. There is simply no way for ABA members to compete. The net result will be the closing of many independent bookstores, and a concentration of power in the book industry in very few hands. Bill Petrocelli, owner of Book Passage in Corte Madera, California, an ABA member, was also quoted in the New York Times:

“You have a choke point where millions of writers are trying to reach millions of readers. But if it all has to go through a narrow funnel where there are only four or five buyers deciding what’s going to get published, the business is in trouble.”

We would find these practices questionable were they taking place in the market for widgets. That they are taking place in the market for books is catastrophic. If left unchecked, these predatory pricing policies will devastate not only the book industry, but our collective ability to maintain a society where the widest range of ideas are always made available to the public, and will allow the few remaining mega booksellers to raise prices to consumers unchecked.

We urge that the DOJ investigate and request an opportunity to come to Washington to discuss this at your earliest convenience.

Sincerely,

ABA Board of Directors:

Michael Tucker, President (Books Inc—San Francisco, CA)
Becky Anderson, Vice President (Anderson’s Bookshops—Naperville, IL)
Steve Bercu (BookPeople—Austin, TX)
Betsy Burton (The King’s English Bookshop—Salt Lake City, UT)
Tom Campbell (The Regulator Bookshop—Durham, NC)
Dan Chartrand (Water Street Bookstore—Exeter, NH)
Cathy Langer (Tattered Cover Book Store—Denver, CO)
Beth Puffer (Bank Street Bookstore—New York, NY)
Ken White (SFSU Bookstore—San Francisco, CA)

CC: Oren Teicher, CEO, American Booksellers Association
Len Vlahos, COO, American Booksellers Association
Owen M.

GET THE GOODS ON THE INDIE WORLD. GET CANTARANEWS.

The end of books? Thesis: “Publishers are facing a new kind of reader, one who absorbs information from multiple sources simultaneously. As we move from the ‘don’t bother me, I’m reading the newspaper’ generation to the ‘yeah, got it’ sound-bite generation, publishers will have to adapt to a multimedia culture bombarded with information but lacking in knowledge….As empowered members of an increasingly multitasking interactive generation that lives in electronic communities, audiences are expecting unprecedented form and delivery of content and services. Only time will tell if the traditional publishing companies are up to the challenge.”—Chuck Martin, “The Nine Dynamics of Future Publishing,” Blueprint to the Digital Economy: Creating Wealth in the Era of E-Business, Edited by Don Tapscott, Alex Lowy and David Ticoll (New York: McGraw-Hill, 1998): 154-155.

The end of books? Antithesis: “It is interesting to note how often a technological development—such as Gutenberg’s—promotes rather than eliminates that which it is supposed to supersede, making us aware of old-fashioned virtues we might otherwise have either overlooked or dismissed as of negligible importance. In our day, computer technology and the proliferation of books on CD-ROM have not affected—as far as statistics show—the production and sale of books in their old-fashioned codex form. Those who see computer development as the devil incarnate (as Sven Birkerts portrays it in his dramatically titled Gutenberg Elegies) allow nostalgia to hold sway over experience. For example, 359,437 new books (not counting pamphlets, magazines and periodicals), were added in 1995 to the already vast collections of the Library of Congress.”—Alberto Manguel, A History of Reading (New York: Penguin, 1996): 135.

The end of books? Synthesis (and new Thesis): “In The Gutenberg Elegies: The Fate of Reading in an Electronic Age, Sven Birkerts warns that increasing multimedia experiences at the expense of written text risks ‘language erosion,’ decline of analytic and logical thought, ‘flattening of historical perspectives,’ and ‘the waning of the private self.’ Texts viewed as ‘difficult,’ predicts Birkerts, will increasingly be glossed over (which is, in fact, happening as students are both unwilling and unable to grasp the more subtle meanings or attend long enough to read them). As we forget or ignore the complexities of history’s lessons, a bland ‘electronic collectivization’ will render us ripe for political totalitarianism.”—Jane M. Healy, Failure to Connect: How Computers Affect Our Children’s Minds—and What We Can Do About It (New York: Simon & Schuster, 1998): 150. Sven Birkerts, The Gutenberg Elegies: The Fate of Reading in an Electronic Age (New York: Fawcett Columbine, 1994): 128-130.

New Antithesis: “In his book The Religion of Technology, [science historian David] Noble traces the interweaving of the technical arts with the millenarian spirit and shows that from the twelfth century on, technology has been perceived as a tool for precipitating the promised time of perfection. On the eve of the scientific revolution, Johann Andreae, Tommaso Campanella, Francis Bacon, and Thomas More each envisioned a man-made New Jerusalem—a fictitious city in which technology would play a key role. Andreae’s Christianopolis [1619], Campanella’s City of the Sun [1602], Bacon’s New Atlantis [1626], and More’s Utopia [1516] were all versions of idealized Christian communities notable for their use of technology. Today too, champions of cyberspace suggest that their technology will create a new utopia—a better, brighter, more ‘heavenly’ world for all. With contemporary cyber-utopianism, the…technology is digital rather than mechanical, but the dream remains the same.”—Margaret Wertheim, The Pearly Gates of Cyberspace (New York: Norton, 1999): 42-43. David Noble, The Religion of Technology: The Divinity of Man and the Spirit of Invention (New York: Knopf, 1997): 5.

All these, trumped by NEW SYNTHESIS: “Of man only the brain would remain, beautifully encased in a duroplast: a globe equipped with sockets, plugs and clasps….The brain case could be connected to any number of appendages, apparatuses, machines, vehicles….Then…transcepting would do away with crowds and congestion, the consequence of overpopulation. Channels of interbrain communication, whether by cable or radio, would make pointless all gatherings and get-togethers, excursions and journeys to attend conferences, and therefore all personal locomotion to whatever location, for every living being could avail itself of sensors and scanners situated over the whole expanse of human habitation….At this point I stopped and remarked that the authors of these papers were surely deranged. Trottelreiner replied coldly that I was a bit hasty in my judgments…the criterion of common sense was never applicable to the history of the human race.”—Stanislaw Lem, The Futurological Congress, Translated by Michael Kandel ([1971] New York: Continuum, 1974): 135-136.

Vox Pop, Sander, and Me

Chapter One

By Andrew Laties

“Who will screw the chains? How will they screw the chains? When will they screw the chains?”

The entire email response to my book query for Screw The Chains: A Free-Jazz Improvising Radical Children’s Bookseller Gets Chewed Up And Spat Out Of Sweet Home Superstore Hell, Chicago. Featuring Dada Buddha’s Guide To Theatrical Bookselling.

This response seemed to show that its writer hadn’t read my query.

So, why was he responding?

And yet, his response was the most positive I’d received in months. So many editors, agents, publishers, former colleagues, book industry acquaintances had received my manuscript. So few had acknowledged the huge package. And here’s this guy responding.

I’d found him using a technique I’d read about in Writer’s Market. Find a book that’s similar to the book you’ve written. Search the acknowledgements page for the name of an agent or editor. Write to this person that you have done a book similar to one they’ve worked on, and would they look at your book, too?

In the case of Sander Hicks, his name showed up on the Internet as publisher of a book I’d found at Broadside Bookshop by Bertell Ollman called Ballbuster? True Confessions of a Marxist Businessman. That sounded like me.

I answered Hicks: “Chain-store employees will quit and open their own stores. They will overwhelm the market and crowd the big stores out of business. In the next ten years.”

Thus began our dialogue of mutual action. Our unspoken pact was to each pretend that whatever we said would happen, and when things didn’t turn out right, we’d cover for each other.

That is, we had in common a theatrical bent. We’d both been successful in the past through assertion, demanding reality play the part we’d written. Failures were written off to a recalcitrance of the real. Fake it till you make it. Keep the faith.

My book was about refusing to accept the judgment of the world. Neglecting to accept that things had gone wrong. Keeping with it after everyone else had given up. Perseverance to the point of perseveration. The beating-a-dead-horse-till-it-leaps-to-life approach to business.

Hicks was early in a venture capital fundraising campaign. He was launching a national chain. Four hundred muckraking media production offices doubling as coffee shops. These gonzo micro-publishing centers—staffed by journalist/baristas and activist café customers—would feed their best locally-distributed works onward to an over-arching media company for national distribution. That Hicks would consider publishing a book attacking chain-stores while striving mightily to launch a chain himself might have been some sort of tipoff to me.

But I refused to be tipped off. I wanted a publisher, and my chosen one, 81-year-old Lyle Stuart—publisher of Anarchist Cookbook—had already said no. So I needed Hicks: he was the younger generation’s Lyle Stuart. Fearless founder of Soft Skull Press, publisher of Fortunate Son, featured star in Horns & Halos movie—Hicks was my last chance, shy of taking Daniel Pinkwater’s advice and publishing myself.

When I told Sander I’d earned a $200,000 salary out of a $900,000 per year store, he bit. He’d publish my book….would I help him re-write his business plan?

I sent my manuscript by mail, and read his emailed plan. Starbucks was huge, why shouldn’t there be a unionized anti-Starbucks? The plan talked up religion and social justice while promising huge profits. It was light on techniques and budgets. No proprietary systems or technology. Rewriting would be work. But I needed additional income, and came up with a proposal. What if these coffee-shop-cum-publishing-centers had bookstores inside, and I became the national buyer? I’d work from home in Amherst.

The answer was yes. Since Hicks was arranging meetings with venture capitalists—in particular a left-wing heavyweight who’d made money with George Soros in currency trading—I busied myself conceptualizing bookstores inside alternative coffeehouses. I spent eight weeks poring over publisher catalogs and websites. I reviewed hundreds of thousands of titles, as I’d recently done while developing my store at Eric Carle Museum of Picture Book Art. I created twenty-five categories that matched the themes of Sander’s coffeehouses. Every book would be unusual and amazing. A thousand title inventory was perfect.

I peppered Hicks with emails. We should buy the recently released Instabook machine for each location so our plan had technology. We should produce lots of literary events. Café-tables should have built-in book displays so coffee drinkers would find themselves looking at books to buy. A TV channel, a music booking agency, a dog-and-pony show.

Sometimes Hicks answered, sometimes he didn’t. No comment on my book. But we scheduled a phone call and talked about the business plan and how to raise five million dollars.

I got worried in May when he stopped responding to email. For five weeks I heard nothing and I concluded reluctantly that I’d made another of my idiotic misjudgments and my book didn’t have a publisher. My café-bookstore inventory list had been an excuse to pretend I was opening another store of my own. I had to start looking for a publisher again. I was depressed.

He finally wrote back. He and coffee-shop-expert partner Holley Anderson had been driving cross-country. Five times. It would be a national chain; they were laying groundwork. They’d been trying to meet with venture capitalists, assessing locations for future coffeeshops, beating the bushes. He hadn’t had a chance to read my book, but we needed to rewrite the business plan. They were moving to New York in July and the first store would be there, maybe Brooklyn.

My wife was the voice of doubt. Sander Hicks would not publish my book. No-one would because it was self-congratulatory and uninteresting. She’d forbidden me to include her in it, and (luckily) she refused to read it or have passages read aloud.

Things had turned out badly. We’d lost a valuable business, lost our friends, traded our townhouse on the Near North Side of Chicago for a ranch house in the suburbs of Amherst, blown through our retirement savings (with penalty for early withdrawal), ruined our credit, taken a seventy-five percent pay cut. The kids seemed to have adjusted ok, but that was the best that could be said. At least by her to me.

I knew that couples whose businesses went south often ended up divorced, and I didn’t want that. My plan was to write a bestseller, make a bunch of money, restore my status, and extract us from our ignominious situation.

So, landing on Hicks as my only possible publisher was an ominous turn of events. Sure, he’d published some hot-selling books, but he’d recently lost his company just like I’d lost mine, in turmoil and recrimination. Would this new company, crazily called Drench Kiss Media Corporation, be a success? My wife’s assessment couldn’t be dismissed. Most likely I was wasting time. My book and Sander’s company would fail to materialize. My distractedness during my first year at Eric Carle Museum might even get me fired.

Luckily, my wife’s was not the only voice on the subject of my book. Eric Carle—the most successful children’s book writer alive—offered to write me a blurb. Norton Juster—another of the most successful children’s authors—told me which were his favorite chapters. Daniel Pinkwater—leading author and National Public Radio star—had written that normally he couldn’t make it past a few pages when someone sent him a manuscript, but with mine he’d been unable to put it down, and
on flipping the pages, no matter where he stopped, he enjoyed what he was reading. None of these men had any idea how I would get my book published, though, since in it I attacked Len Riggio, owner of Barnes & Noble—America’s most popular corporation—accusing him of damaging the culture of reading and driving book prices sky high.

Which, again, brought me, inevitably, to this man Sander Hicks. He’d published the biography of George W. Bush that told of a 1972 arrest for cocaine use while driving—an arrest all record of which was quashed and expunged by father George H.W. Bush. The book, Fortunate Son, written by James Hatfield, was first printed in a seventy-five thousand copy print-run, then recalled and incinerated by its publisher. Hicks’s company Soft Skull Press had obtained the rights after this recall, and republished the book, surviving lawsuits and publicity debacles in order to see the information distributed. (The key anecdote’s source turned out to be close Bush friend Karl Rove who’d told Jim Hatfield the story personally, and never denied having done so. However Hatfield ended up a suicide.)

If anyone was qualified to handle my book, it was surely this man who’d seen an unpublishable book into print, even though he’d lost control of his company while doing so. My wife’s skepticism didn’t jibe with the facts. I was certain that if I remained focused on it, Sander would indeed publish my book, and his coffee-shops, to be called Vox Pop, would come into being as well.

[Andy Laties’s book—Rebel Bookseller: How To Improvise Your Own Indie Store And Beat Back The Chains—was published by Vox Pop in 2005 and won the 2006 Independent Publisher Award for Best Book on the Subject of Writing and Publishing.]

“World War 3 Illustrated Magazine” is the exemplar of the many books at the fair which are not to be found on the Kindle, proving, according to the Times that print books are viable, alive and well.

That’s definitely the feel of this fair: people from all over the world are exhibiting handmade and small press publications of kinds that can only be appreciated if felt, smelt, perused and carried around. Books as art. Kudos to the fine New York bookstore Printed Matter — one of the most innovative in the world — for creating this marvelous bookfair.

The books are printed. The holiday season approaches. Then, at the last possible moment, Barnes & Noble cancels the order.

Author and publisher are appalled. No explanation from B&N is forthcoming. Those extra copies will have no chance of selling at full price; they will be recycled for scrap, or dumped at a loss into the international discount book market. When they sell, the author will receive no royalties from these “remaindered” copies.

The frustrated author decides to go sleuthing. In the midst of the holiday season he visits several Barnes & Nobles. Displayed front and center in every store is a fancy gift edition of that very Victorian classic. The competing book’s design appears to closely mimic that of the scholarly version our author had spent years preparing. Yet on close inspection, the “winning” version here stacked high is an ordinary reprint, with no thorough and scholarly apparatus, no elegantly researched and elaborately captioned illustrations. Not a better book.

Who could be the victorious publisher of this hack stand-in for our acclaimed scholar’s outstanding edition? Who but Barnes & Noble itself!

Why was the excellent edition displaced by the mediocre? Because Barnes & Noble corporation wished to ensure that no superior, competing version of this holiday classic should “steal” sales from the inferior, in-house edition which their own publishing arm was releasing that very season.

Did you know that Barnes & Noble robbed excellent, contemporary authors of about $20 million in royalties last year? That’s because over 10% of the books Barnes & Noble now sells are B&N-published titles. Between 2002 and today, Barnes & Noble achieved the striking goal of sharply increasing the percentage of “self-published” titles they sell from a mere 3% all the way up to today’s more than 10%. Many of these B&N-published books are reprints of classics, and feature inferior scholarship. Worse, a large number of B&N-produced books are dated nonfiction titles that went out of print long ago. Frequently, these newly republished out-of-print books weren’t good enough to survive in the marketplace of ideas as the years went by. More accurate books are in print today. These new, excellent books should be granted shelf space at Barnes & Noble. Instead, many are not even stocked.

Why does Barnes & Noble prefer to sell outdated books? The authors of those outdated reprints have been offered and have accepted one-time lump sum fees in republication deals with B&N. These writers of yesterday’s books won’t get paid per copy sold now, no matter how many copies of their old books Barnes & Noble pushes into readers’ hands. Flat-fee contracts give B&N a strong incentive to move as many copies of these outdated nonfiction books as possible, since no matter how many B&N sells, the flat fee has been paid. No need to keep paying the authors any royalties per copy sold. Flat-fees mean great profits for Barnes & Noble.

By contrast, ordinary royalty deals are more expensive because the author gets paid and paid and paid. Royalty deals are also fairer to authors who have spent years creating their books and haven’t been paid for their efforts all that time. New authors, whose better, current books can’t make it onto B&N’s shelves, have been robbed of the approximately $20 million in royalties they would have received if B&N were stocking these modern authors’ better, newer books.

To defeat the royalty-paying titles published by competing publishers, B&N prominently displays its older, flat-fee titles as if they were terrific, hot titles. These old books get placement at the front of the B&N bookstores, sporting fancy new dust jackets, and stickers that read: “Special Price!” The only thing special about these obsolete, reprinted flat-fee books is that they’re a gravy train for the B&N corporation since their authors won’t see royalties when you or I buy a copy.

Big investors on Wall Street love this B&N practice of republishing out-of-date nonfiction books and mediocre editions of classics in exchange for one-time flat fees to the authors and designers. Too bad for contemporary authors. Because B&N controls twenty-five percent of the bookstore marketplace, authors whose fresh books come from major publishing companies or small presses cannot easily get their books into that twenty-five percent of the market. Barnes & Noble shelves are instead increasingly filling up with books from their flat-fee, out-of-print republication program. Shoppers in B&N stores do not get a chance to see lots of the great new books by contemporary authors. Shoppers see those old, republished flat-fee books instead.

But Barnes & Noble is cutting its own throat. By flooding its stores’ shelves with inferior books, B&N is providing an opportunity for independent booksellers to better serve the public, through superior book selection. More importantly, independent bookstores are devoted to selling books that pay authors their due royalties for each copy sold. If independent bookstores recaptured the market share that was taken by Barnes & Noble in the 90s, authors would earn tens of millions of dollars more in royalties every year.

It’s going to happen. Over one hundred new indie bookstores opened nationwide last year. Hundreds more are in the planning stages.